Suppose That Investment Decreases by $15 Billion

question 59

Multiple Choice

Suppose that investment decreases by $15 billion. If the multiplier is 2.5, the aggregate demand curve

• A)shifts leftward by a horizontal distance of $37.5 billion.
• B)shifts leftward by a horizontal distance greater than $37.5 billion.
• C)shifts leftward by a horizontal distance less than $37.5 billion.
• D)shifts upward by a vertical distance of $37.5 billion.
• E)is not affected.

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Definitions:

Used Textbook

A previously owned textbook that may be sold at a lower price than a new version of the same book.

Statistical Discrepancy

The difference between two figures that are expected to be equivalent, often arising from timing or measurement errors in data collection.

GDP

A metric for evaluating the economic success of a nation, Gross Domestic Product calculates the overall value of goods and services generated over a designated period.