Refer to the information provided in Figure 24.4 below to answer the question(s) that follow. Figure 24.4
-Refer to Figure 24.4. If aggregate expenditures are represented by AE₂ and government spending increases by $100 billion, equilibrium aggregate output increases by $________ billion.

Question

Refer to the information provided in Figure 24.4 below to answer the question(s) that follow.

Figure 24.4
-Refer to Figure 24.4. If aggregate expenditures are represented by AE₂ and government spending increases by $100 billion, equilibrium aggregate output increases by $________ billion.

Quizplus · Accepted Answer

The increase in government spending leads to a multiplied effect on aggregate output due to the multiplier effect. If the multiplier is 5, a $100 billion increase in government spending would increase equilibrium aggregate output by $500 billion.

Refer to the Information Provided in Figure 24