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ECN 211 Midterm Exam 3 Review Session-Questions and Answers 2025

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ECN 211 Midterm Exam 3 Review Session-Questions and Answers 2025 Suppose the size of the multiplier is 7 and the government increases its purchases by $20 billion. Also, suppose the AD curve would shift from AD1 to AD2 if there were no crowding out; the AD curve actually shifts from AD1 to AD3 with crowding out. Also, suppose the horizontal distance between the curves AD1 and AD3 is $100 billion. The extent of crowding out, for any particular level of the price level, is:

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Review Session
Midterm Exam #3

,Exam Details
• 75 mins (during class hours)
• 40 Multiple Choice Questions
• Calculators Allowed (cannot use your computers/tablets/cellphone
• Please get HB (No. 2) Pencils along
• And get your ASU ID (physical or electronic) along

,Question 1
Suppose the size of the multiplier is 7 and the government increases its purcha
$20 billion. Also, suppose the AD curve would shift from AD1 to AD2 if there we
crowding out; the AD curve actually shifts from AD1 to AD3 with crowding out.
suppose the horizontal distance between the curves AD1 and AD3 is $100 billio
extent of crowding out, for any particular level of the price level, is:

A. $40 billion
B. $20 billion
C. $100 billion
D. $140 billion

, Answer 1
Suppose the size of the multiplier is 7 and the government increases its purcha
$20 billion. Also, suppose the AD curve would shift from AD1 to AD2 if there we
crowding out; the AD curve actually shifts from AD1 to AD3 with crowding out.
suppose the horizontal distance between the curves AD1 and AD3 is $100 billio
extent of crowding out, for any particular level of the price level, is:

A. $40 billion
B. $20 billion
C. $100 billion
D. $140 billion

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