Refer to Equation 24.6. If government spending in Kiwiland increases by 400, equilibrium output increases by

Question

Quizplus · Accepted Answer

According to Equation 24.6, the change in equilibrium output is equal to the change in government spending multiplied by the multiplier. The multiplier in this case is 2, so when government spending increases by 400, equilibrium output will increase by 2 x 400 = 800. Therefore, the best choice is B.