The multiplier effect of fiscal policy predicts that an increase in government spending of $250 billion will increase total income by $1000.00 billion if the marginal propensity to consume is 0.75. If we account for crowding-out, then the increase in aggregate demand will be:
Choose one:
A. less than $1000.00 billion.
B. exactly $1000.00 billion.
C. more than $1000.00 billion.
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