Suppose That the Multiplier Is 4,autonomous Investment Rises by $50

question 79

Multiple Choice

Suppose that the multiplier is 4,autonomous investment rises by $50 billion,and autonomous consumption falls by $50 billion at the same time.Which of the following is true?

• A)Equilibrium GDP demanded will be the same,but the type of goods produced will be different.
• B)Equilibrium GDP demanded will increase by $200 billion.
• C)Equilibrium GDP demanded will decrease by $200 billion.
• D)Equilibrium GDP demanded will increase by $400 billion.
• E)Equilibrium GDP demanded will decrease by $400 billion.

---

Definitions:

Revenue

Revenue is the income generated from normal business operations and includes discounts and deductions for returned merchandise.

Expenses

The costs incurred by a business in the process of earning revenue, such as costs of goods sold, operating expenses, and taxes.

Debits

Entries that are recorded on the left side of accounting ledgers and journals, representing increases in assets or expenses or decreases in liabilities, equity, and income.

Assets

Resources owned by a company or individual that have economic value and can provide future benefits.