Assume the Economy Is Initially in Equilibrium with Real GDP

Multiple Choice

Assume the economy is initially in equilibrium with real GDP equal to potential GDP.Other things equal,if the economy enters a recession and there are no automatic stabilizers,the IS curve would shift to the ________,and the shift would be equal to ________.

A) right; decline in investment spending
B) left; decline in investment spending
C) right; decline in investment spending times the multiplier
D) left; decline in investment spending times the multiplier