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.

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