Assume That an Initial Change in Spending of $10 Billion

question 103

Multiple Choice

Assume that an initial change in spending of $10 billion results in a rightward shift in aggregate demand that increases real GDP by $40 billion.The multiplier is:

• A)$10 billion.
• B)$40 billion.
• C)4
• D)5

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Definitions:

Psychological Roots

Fundamental underlying causes or bases of behaviors, thoughts, or emotions from a psychological perspective.

Newborn

An infant who is within hours, days, or up to a few weeks old.

Fivefold

Referring to something that is five times as great or as numerous.

Growth Infancy

The rapid physical and developmental changes that occur in human babies from birth to the end of the first year of life.