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Suppose Equilibrium Real GDP Is Currently at $800 Billion and Investment

Question 93

Multiple Choice

Suppose equilibrium real GDP is currently at $800 billion and investment is $100 billion. If an increase in the interest rate reduces investment from $100 billion to $75 billion, and the MPC is 0.8, the new level of equilibrium real GDP will be:


A) $500 billion.
B) $600 billion.
C) $675 billion.
D) $775 billion.

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