Suppose a country repeals an investment tax credit and that leads to a decrease in investment spending of $100 billion. Suppose the multiplier is 1.2 and the economy's real GDP is $5,000 billion. This contractionary action
A) will shift the aggregate demand curve to the left by $120 billion.
B) will shift the aggregate demand curve to the left by $6,000 billion.
C) will shift the aggregate supply curve to the left by $120 billion.
D) will shift the aggregate supply curve to the left by $6,000 billion.
Correct Answer:
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Q79: Use the following to answer questions .
Exhibit:
Q80: Use the following to answer questions .
Exhibit:
Q81: Suppose the government institutes a new investment
Q82: As discussed in the Case in Point
Q83: Use the following to answer questions .
Exhibit:
Q85: Suppose that income taxes are increased by
Q86: Suppose a country increases government purchases by
Q87: Use the following to answer questions .
Exhibit:
Q88: The impact of instituting investment tax credits
Q89: As discussed in the Case in Point
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