Refer to the information provided in Figure 13.2 below to answer the questions that follow. Figure 13.2
-Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from
A)AD1 to AD2.
B)AD3 to AD4.
C)AD5 to AD6.
D)The amount of crowding out is the same for all AD curve shifts shown in the figure.

Question

Refer to the information provided in Figure 13.2 below to answer the questions that follow.  Figure 13.2
-Refer to Figure 13.2.Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from
A)AD1 to AD2. 
B)AD3 to AD4. 
C)AD5 to AD6. 
D)The amount of crowding out is the same for all AD curve shifts shown in the figure.

Quizplus · Accepted Answer

In Figure 13.2, the steeper the SRAS curve, the greater the amount of crowding out. Therefore, when the aggregate demand curve shifts from AD5 to AD6, the steep SRAS curve would lead to the greatest amount of crowding out.

Refer to the Information Provided in Figure 13