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Question 94

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Use the following to answer questions .
Exhibit: Aggregate Expenditures and Real GDP 2 Use the following to answer questions . Exhibit: Aggregate Expenditures and Real GDP 2 -(Exhibit: Aggregate Expenditures and Real GDP 2) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, I<sub>P</sub> = Planned Investment. Consider a simple economy where AE = C + I<sub>P</sub>, I<sub>P</sub> 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) 4.00 D) It depends on the ∆AE and the ∆Y since the multiplier formula is ∆AE ÷∆Y.
-(Exhibit: Aggregate Expenditures and Real GDP 2) Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, IP = Planned Investment. Consider a simple economy where AE = C + IP, IP 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) 4.00
D) It depends on the ∆AE and the ∆Y since the multiplier formula is ∆AE ÷∆Y.

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