Author Question: If an increase in investment spending of 50 million results in a 400 million increase in equilibrium ... (Read 506 times)

sheilaspns · **on:** Jun 29, 2018

If an increase in investment spending of 50 million results in a 400 million increase in equilibrium real GDP, then

A) the multiplier is 0.125. B) the multiplier is 3.5.
C) the multiplier is 8. D) the multiplier is 50.

Question 2

Expansionary fiscal policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.

A) higher; lower B) higher; higher C) lower; lower D) lower; higher