Difficulty: Medium Figure 13-4

question 144

Multiple Choice

Difficulty: Medium Figure 13-4
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Suppose AE = C + I_P, and I_P is autonomous. If potential real GDP is $7,000 billion, what must happen to planned investment for the economy to reach its potential real GDP?

• A) I_P must be decreased by $1,000 billion
• B) I_P must be increased by $1,000 billion
• C) I_P must be decreased by $500 billion
• D) I_P must be increased by $500 billion

---

Definitions:

Old Jokes

Humorous anecdotes or remarks that have been widely known for a long period of time.

Hydraulic Car Smasher

A type of machine or mechanical press for flattening or crushing cars through the application of high-pressure hydraulic power.

Marginal Cost

The additional cost incurred by producing one more unit of a product or service.

Dispose of Cars

The process of disposing or getting rid of cars that are no longer wanted, which can include selling, recycling, or scrapping them.