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,
I_P = Planned Investment.Consider a simple economy where AE = C + I_P, I_P is autonomous
And the consumption function is given by C = $1,000 billion + 0.75Y.What is the value of the multiplier?

A) 0.75
B) 1.33
C) 4
D) It depends on the ∆AE and the ∆Y since the multiplier formula is ∆AE ÷∆Y.