The Figure Given Below Represents the Macroeconomic Equilibrium in the Aggregate

question 2

Multiple Choice

The figure given below represents the macroeconomic equilibrium in the aggregate income and aggregate expenditure framework. Assume that MPI is equal to zero.

-If the spending multiplier equals 5 and equilibrium income is $2 billion below potential GDP, then _____ to reach the potential real GDP level.

• A) total spending needs to increase by $0.1 billion
• B) nominal GDP needs to increase by $1.2 billion
• C) total spending needs to decrease by $6 billion
• D) nominal GDP needs to decrease by $12 billion
• E) total spending needs to increase by $0.4 billion

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Definitions:

Employment Contracts

Legally binding agreements between an employer and an employee, outlining the terms and conditions of employment.

Provision

A specific clause within a legal document or contract that stipulates a condition or requirement.

Usurious Transaction

A lending agreement that involves charging an interest rate above the limit established by law.

Evidence Of Usury

Evidence of usury involves documentation or proof that a lender charged an interest rate above the legal limit established by law, making a loan agreement illegal or subject to penalties.