Use the Following to Answer Questions

question 160

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Expenditures and Real GDP 1
-(Exhibit: Aggregate Expenditures and Real GDP 1) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I_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

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Definitions:

Linear Regression

A statistical method used to model the relationship between a dependent variable and one or more independent variables by fitting a linear equation to observed data.

Bar Charts

A graphical representation of data using rectangular bars of varying lengths, indicating different values or categories.

Pie Charts

A circular statistical graphic divided into slices to illustrate numerical proportion.

Subject Matter

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