Assume That an Economy's Real GDP Multiplier Is 4

question 97

Multiple Choice

Assume that an economy's real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full-employment equilibrium of $1,500 billion?

• A) $500 billion spending cut.
• B) $500 billion spending increase.
• C) $125 billion spending cut.
• D) $125 billion spending increase.
• E) $2,000 billion spending cut.

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Definitions:

Vertebrate Eyes

The specialized organ in vertebrates that allows for the perception of vision, consisting of structures such as the cornea, iris, lens, and retina.

Retina

The light-sensitive layer of tissue at the back of the eye that captures images and sends visual information to the brain.

Light Sensitive

Refers to an organism or material that reacts to or is affected by the presence or intensity of light.

Statocysts

Sensory organs found in invertebrates that help to maintain equilibrium and balance.