Figure 85 Alt Text for Figure 8

question 14

Multiple Choice

Figure 8.5 Alt text for Figure 8.5: In figure 8.5, a graph comparing real GDP and real aggregate expenditure.
Long description for Figure 8.5: The x-axis is labelled, real GDP, Y (billions of 2007 dollars) with values GDP1 and GDP2 marked.The y-axis is labelled, real aggregate expenditure, AE (billions of 2007 dollars) .Line AE1 begins a little less than half way along the x-axis and slopes up to the end of the x-axis.Line AE2 begins at a point half way along the x-axis and slopes up to the top right corner.Line AE2 is to the left of line AE1 and is on a similar path as line AE1.Line Y = AE, originates at the vertex and slopes up to the top right corner.Line Y = AE meets line AE1 at point K, half way along both lines.Line Y = AE meets the line AE2 at point N, plotted close to the right end of line AE2.Point J is marked a little less than half way along line AE1, to the left of point K.Point L is plotted close to the right end of line AE1, to the right of point K.Points K, L, and N are connected to their respective coordinates, GDP1 and GDP2, on the x-axis with dotted lines.
-Refer to Figure 8.5.Suppose that investment spending increases by $10 million, shifting up the aggregate expenditure line and GDP increases from GDP₁ to GDP₂.If the MPC is 0.9, then what is the change in GDP?

• A)$9 million
• B)$10 million
• C)$90 million
• D)$100 million
• E)$109 million