Suppose the Multiplier Is 2 and the Short-Run Aggregate Supply

question 117

Multiple Choice

Suppose the multiplier is 2 and the short-run aggregate supply curve is positively sloped. Investment increases by $10 billion. In the short run, equilibrium real GDP

• A)increases by $20 billion.
• B)increases by more than $20 billion.
• C)decreases by less than $20 billion.
• D)does not change.
• E)increases by less than $20 billion.

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Definitions:

7UP

a brand of lemon-lime flavored, non-caffeinated soft drink.

Dr Pepper/Seven Up, Inc.

A major soft drink company in the United States, known for producing popular beverages such as Dr Pepper and 7UP.

Brand Licensing

A contractual agreement whereby one company (licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty or fee.

Luxottica Group

An Italian multinational corporation that designs, manufactures, and sells eyewear and eyecare products, known for owning numerous prestigious brands and retail outlets.