The Multiplier Is 2

question 134

Multiple Choice

The multiplier is 2.5 and the SAS curve is upward sloping. Investment increases by $20 billion. In the short run, equilibrium real GDP will

• A) increase by $50 billion.
• B) increase by less than $50 billion.
• C) decrease by $50 billion.
• D) decrease by less than $50 billion.

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Definitions:

Drive

An internal motivational state created by physiological or psychological needs that drives behavior towards goals or necessities.

Incentive

Something that motivates or encourages an individual to take action or behave in a specific way.

Sensation-seeker

An individual who seeks out experiences that are varied, novel, complex, and intense in order to achieve a heightened sense of excitement or thrill.

Skydiving

The sport or activity of jumping from an aircraft and performing various maneuvers before deploying a parachute to land.