Figure 23-3 -Refer to Figure 23-3. Suppose That Investment Spending Decreases by Investment

question 90

Multiple Choice

Figure 23-3

-Refer to Figure 23-3. Suppose that investment spending decreases by $5 million,decreasing aggregate expenditure and decreasing real GDP from GDP₂ to GDP₁. If the MPC is 0.8,then what is the change in GDP?

• A) -$4 million
• B) -$5 million
• C) -$25 million
• D) -$40 million

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Definitions:

Environment

The surroundings or conditions in which a person, plant, or animal lives or operates, including natural, social, and cultural factors.

Nutrient

Substances that provide nourishment essential for the growth and maintenance of life.

Oxygen-Transport Pigment

A compound, such as hemoglobin in humans, responsible for carrying oxygen through the bloodstream.

Hemoglobin

This substance in red blood cells is in charge of moving oxygen from the lungs to the body's tissues.