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Difficulty: Medium Figure 13-4

Question 144

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Difficulty: Medium Figure 13-4 Difficulty: Medium Figure 13-4 -Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI<sub>P</sub> = Planned Investment. Suppose AE = C + I<sub>P</sub>, and I<sub>P</sub> is autonomous. If potential real GDP is $7,000 billion, what must happen to planned investment for the economy to reach its potential real GDP? A) I<sub>P</sub> must be decreased by $1,000 billion B) I<sub>P</sub> must be increased by $1,000 billion C) I<sub>P</sub> must be decreased by $500 billion D) I<sub>P</sub> must be increased by $500 billion
-Refer to Figure 13-4. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JIP = Planned Investment. Suppose AE = C + IP, and IP is autonomous. If potential real GDP is $7,000 billion, what must happen to planned investment for the economy to reach its potential real GDP?


A) IP must be decreased by $1,000 billion
B) IP must be increased by $1,000 billion
C) IP must be decreased by $500 billion
D) IP must be increased by $500 billion

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