In the Third Quarter of 2008, Investment in the U

Multiple Choice

In the third quarter of 2008, investment in the U.S. totaled $1.4 trillion and in 2007, investment was $1.3 trillion. In addition, third quarter real GDP was $11 trillion. Suppose the MPC in the U.S. is 0.80. Ignoring the effects of imports and taxes, the multiplier is ________ and the change in investment will decrease equilibrium expenditure by ________.

A) 2; $1 trillion
B) 5; $1 trillion
C) 2; $200 million
D) 5; $500 million