Figure 10.2 -Refer to Figure 10.2..Assume the Economy Is Initially at Equilibrium

Multiple Choice

Figure 10.2

-Refer to Figure 10.2..Assume the economy is initially at equilibrium at potential GDP of $250 billion.If the MPC = 0.50 and the difference between AE₁ and AE₂ represents a $75 billion decrease in planned investment spending,real GDP at Y₂ will be equal to

A) $100 billion.
B) $125 billion.
C) $175 billion.
D) $212.5 billion.