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Author Question: Refer to Figure 12-3. Suppose that investment spending decreases by $5 million, ... (Read 198 times)

bobbie

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Question 1

Figure 12-3










Refer to Figure 12-3.  Suppose that government spending increases, shifting up the aggregate expenditure line. GDP increases from GDP
1 to GDP
2, and this amount is $400 billion. If the MPC is 0.75, then what is the distance between N and L or by how much did government spending change?


◦ $10 billion
◦ $100 billion
◦ $200 billion
◦ $300 billion

Question 2

Figure 12-3










Refer to Figure 12-3.  Suppose that investment spending decreases by $5 million, decreasing aggregate expenditure and decreasing real GDP from GDP
2 to GDP
1. If the MPC is 0.8, then what is the change in GDP?


◦ -$4 million
◦ -$5 million
◦ -$25 million
◦ -$40 million


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Marked as best answer by bobbie on Mar 16, 2019

lolol

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bobbie

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lolol

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