The Slope of the AE Curve Is 0

question 185

Multiple Choice

The slope of the AE curve is 0.9. Investment decreases by $100 million and the price level is constant. Real GDP

• A) decreases by $10 million.
• B) increases by $90 million.
• C) decreases by $1 billion.
• D) increases by $1 billion.

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Definitions:

Compounded Continuously

A method of calculating interest where the interest amount is constantly added to the principal, leading to exponential growth.

Annual Interest Rate

The percentage of a sum of money charged for its use per year.

Compounded Continuously

A way of calculating interest where the frequency of compounding is so high that it is effectively continuous, leading to exponential growth.

Exponential Equation

An equation in which a variable appears in the exponent, showing the rate of growth or decay.