If Government Expenditure Rises by $27

Multiple Choice

If government expenditure rises by $27.5 billion and the multiplier in the economy is 2.5, then:

A) real GDP rises by $27.5 billion, and the IS curve shifts to the right.
B) real GDP rises by $68.75 billion, and the IS curve shifts to the right.
C) real GDP falls by $55 billion, and the IS curve shifts to the left.
D) real GDP falls by $11 billion, but the IS curve does not shift.