Assume That Initially G Is $100 and Equilibrium Real GDP

question 107

Multiple Choice

Assume that initially G is $100 and equilibrium real GDP demanded is $1,000.Suppose the multiplier is 4 and G increases to $200.By what amount will real GDP demanded increase?  

• A) by $100 
• B) by $1,000 
• C) by $1,400 
• D) by $2,000

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Definitions:

Uses of Markets

The functions markets serve in allowing buyers and sellers to exchange goods, services, and information, facilitating the allocation of resources.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Increase in Demand

A situation where more of a good or service is desired by consumers at all price levels, shifting the demand curve rightward.

Quantity Supplied

The quantity of a product or service that suppliers are ready and capable of offering for sale at a specific price during a defined time frame.