Figure 13-5 -Refer to Figure 13-5. Let Y = Real GDP, AE

Multiple Choice

Figure 13-5
-Refer to Figure 13-5. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI_P = Planned Investment. Consider a simple economy where AE = C + I_P, I_P is autonomous
Jand the consumption function is given by C = $1,000 billion + 0.75Y. If potential real GDP is $9,000 billion, by how much must planned investment change to reach potential real GDP?
J

A) I_P must increase by $250 billion.
B) I_P must decrease by $250 billion.
C) I_P must increase by $1,000 billion.
D) I_P must decrease by $1,000 billion.