Answer to Question #90519 in Macroeconomics for Sung Eun Seok

Question

10. The multiplier is 2.0 and, because of an increase in expected future profit, firms increase their
investment by $10 billion. As long as the SAS curve is not horizontal, in the short run,
equilibrium real GDP will
Select one:
A. be unaffected
B. increase by less than $20 billion.
C. increase by more than $20 billion.
D. increase by $20 billion.

Answer 1

the answer is D. increase by $20 billion.