If the Multiplier Is 4 and Real GDP Increases by $520

question 138

Multiple Choice

If the multiplier is 4 and real GDP increases by $520 billion, the increase in investment spending must have been

• A)$110 billion.
• B)$120 billion.
• C)$130 billion.
• D)$140 billion.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit, leading to optimal price and quantity.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often due to market forces.

MC Curve

A graph representing the marginal cost of producing an additional unit of a good or service, usually upward sloping, reflecting increasing costs.

AVC Curve

The graphical representation of the average variable cost per unit of output over various levels of production.