2.4 (Investment and the Multiplier) This chapter assumes that investment is autonomous. What would happen to the size of the multiplier if investment increases as real GDP increases? Explain.

Question

LO3
3.1 (Shifts of Aggregate Demand) Assume the simple spending multiplier equals 10. Determine the size and direction of any changes of the aggregate expenditure line, real GDP demanded, and the aggregate demand curve for each of the following changes in spending:
a. Spending rises by $8 billion at each income level
b. Spending falls by $5 billion at each income level
c. Spending rises by $20 billion at each income level

Answer 1

12323