If the Spending Multiplier Is Greater Than 1

question 115

Multiple Choice

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause:

• A)equilibrium investment to increase by less than $200 billion.
• B)equilibrium investment to decrease by more than $200 billion.
• C)equilibrium real GDP demanded to increase by more than $200 billion.
• D)equilibrium real GDP demanded to decrease by less than $200 billion.
• E)equilibrium saving to decrease by more than $200 billion.

Understand the relationship between supply shift and its impact on market dynamics.

Grasp the concept of market equilibrium and its significance in economic efficiency.

Comprehend how changes in price affect supply and demand.

Analyze the consequences of excess supply or demand on market prices.

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