Suppose That Investment Increases by $10 Billion

question 167

Multiple Choice

Suppose that investment increases by $10 billion. Which one of the following would reduce the effect of this increase in autonomous expenditure on equilibrium real GDP in the short run?

• A)an increase in the marginal propensity to consume
• B)a decrease in the marginal propensity to import
• C)a decrease in the marginal tax rate
• D)a steeper short-run aggregate supply curve
• E)a flatter short-run aggregate supply curve

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Definitions:

Reflection

The act of thinking deeply or carefully about something, often with the purpose of gaining better understanding or insight.

Impact

denotes the strong influence or effect something has on a situation, person, or object.

Action

The process or act of doing something, typically to achieve a goal or handle a problem.

Overwhelmed

A state of being where an individual feels unable to cope with the demands placed on them due to excessive stress or emotional burden.