Suppose Investment Rises by $50 Billion at Each Price Level

question 8

Multiple Choice

Suppose investment rises by $50 billion at each price level. If the value of the multiplier is 1.5, what is the amount of change in real GDP demanded at each price level?

• A) $50 billion
• B) $75 billion
• C) $125 billion
• D) $150 billion

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Definitions:

Synergy Value

The additional value created from combining two or more entities, where the whole is greater than the sum of its parts.

Equity-Financed

Pertaining to a business or project that is funded through the sale of equity or shares rather than debt.

Price Per Share

The current market price of a share of stock in a company.

Market Value

The ongoing price that an asset or service can fetch when bought or sold on the market.