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Suppose That the Multiplier Is 4, Autonomous Investment Rises by $50

Question 120

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Suppose that the multiplier is 4, autonomous investment rises by $50 billion, and autonomous consumption falls by $50 billion at the same time.What will be the effect on equilibrium GDP?  


A)  Equilibrium GDP demanded will decrease by $200 billion. 
B)  Equilibrium GDP demanded will be the same, but the type of goods produced will be different. 
C)  Equilibrium GDP demanded will increase by $200 billion. 
D)  Equilibrium GDP demanded will increase by $400 billion.

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