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:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choice.

Car

A motor vehicle with wheels designed for transport, usually propelled by an internal combustion engine or an electric motor.

Truck

A vehicle engineered for the purpose of transporting goods or cargo.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision or choosing between two or more options.