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Figure 13-5 -Refer to Figure 13-5. Let Y = Real GDP, AE

Question 117

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Figure 13-5 Figure 13-5 -Refer to Figure 13-5. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JI<sub>P</sub> = Planned Investment. Consider a simple economy where AE = C + I<sub>P</sub>, I<sub>P</sub> is autonomous Jand the consumption function is given by C = $1,000 billion + 0.75Y. If potential real GDP is $9,000 billion, by how much must planned investment change to reach potential real GDP? J A) I<sub>P</sub> must increase by $250 billion. B) I<sub>P</sub> must decrease by $250 billion. C) I<sub>P</sub> must increase by $1,000 billion. D) I<sub>P</sub> must decrease by $1,000 billion.
-Refer to Figure 13-5. Let Y = real GDP, AE = Aggregate Expenditures, C = Consumption, JIP = Planned Investment. Consider a simple economy where AE = C + IP, IP is autonomous
Jand the consumption function is given by C = $1,000 billion + 0.75Y. If potential real GDP is $9,000 billion, by how much must planned investment change to reach potential real GDP?
J


A) IP must increase by $250 billion.
B) IP must decrease by $250 billion.
C) IP must increase by $1,000 billion.
D) IP must decrease by $1,000 billion.

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