Suppose That Investment Increases by $10 Billion

question 81

Multiple Choice

Suppose that investment increases by $10 billion. If the multiplier is 2, the AD curve

• A)shifts rightward by the horizontal distance $20 billion.
• B)shifts rightward by a horizontal distance greater than $20 billion.
• C)shifts rightward by a horizontal distance less than $20 billion.
• D)is not affected.
• E)shifts upward by a vertical distance equal to $20 billion.

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Definitions:

Scarcity

The core issue in economics is the presence of endless human desires within a finite resource environment.

Economy

A system of production, distribution, and consumption of goods and services within a certain geographical area.

Inefficiencies

Instances where resources are not used optimally, resulting in wasted or less productive outcomes.

Scarcity

is the fundamental economic problem of having seemingly unlimited human wants in a world with limited resources.