Suppose That the Slope of the AE Curve Is 0

question 346

Multiple Choice

Suppose that the slope of the AE curve is 0.80. Then an increase of investment of $10 billion leads to an increase in equilibrium real GDP equal to

• A) $8.0 billion.
• B) $10.0 billion.
• C) $12.5 billion.
• D) $50.0 billion.

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Definitions:

Market Rate

The interest rate available in the marketplace for similar transactions.

Times Interest Earned Ratio

A financial metric that evaluates how well a company can cover its interest expenses with its earnings before interest and taxes.

Net Income

Net income, also known as net profit, is the total profit of a company after all revenues, costs, and expenses have been deducted.