If the Multiplier Is 3, Equilibrium Real GDP Is $1,000

question 72

Multiple Choice

If the multiplier is 3, equilibrium real GDP is $1,000 billion, and investment is $400 billion, what will happen if investment decreases to $380 billion? Real GDP will:

• A)increase to $1,020 billion.
• B)increase to $1,060 billion.
• C)decrease to $980 billion.
• D)decrease to $940 billion.
• E)decrease to $970 billion.

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Definitions:

Reflex Arc

A neural pathway that controls an involuntary, rapid response to a stimulus.

Stretch Reflex Tests

Diagnostic tests that assess the muscle stretch reflexes, evaluating the functioning of the nervous system by tapping certain tendons.

Brain

The central organ of the human nervous system, responsible for processing sensory data, regulating physical functions, and facilitating cognitive abilities such as thought and emotion.

Plantar Reflex

A reflex elicited when the sole of the foot is stimulated, causing the toes to point downward.