Suppose That in a Particular Economy, the Multiplier Is Equal

question 356

Multiple Choice

Suppose that in a particular economy, the multiplier is equal to 5. In terms of aggregate demand and aggregate supply, this value for the multiplier means that after an increase in investment

• A) at each level of real GDP, the aggregate demand curve shifts upward by an amount equal to 5 times the change in investment.
• B) at each level of real GDP, the aggregate supply curve shifts upward by an amount equal to 5 times the change in investment.
• C) at each price level, the aggregate supply curve shifts rightward by an amount equal to 5 times the change in investment.
• D) at each price level, the aggregate demand curve shifts rightward by an amount equal to 5 times the change in investment.

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