Use the Following to Answer Questions

question 43

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. Which of the following statements is true?

• A) The multiplier = 0.5
• B) The multiplier = (1 − 0.5)/1 = 0.5
• C) The multiplier = 2
• D) The multiplier = ∆AE ÷ ∆Y

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