In the extreme case of a complete crowding-out effect A) an ...

[stevenposner]

In the extreme case of a complete crowding-out effect
 
  A) an increase in interest rates will stimulate investment spending.
  B) an increase in government spending will not increase aggregate demand.
  C) an increase in tax rates will stimulate work effort.
  D) an increase in government spending will stimulate investment spending.

Question 2

Refer to the above figure. Which of the graphs is consistent with the long-run aggregate supply curve?
 
  A) Graph A B) Graph B C) Graph C D) Graph D

[Ahnyah]

Answer to Question 1

B

Answer to Question 2

A