In the above figure, AE₀is the aggregate planned expenditure curve and then investment increases by an additional $2 trillion. As a result, the new equilibrium GDP will be

Question

Quizplus · Accepted Answer

The increase in investment will shift the aggregate planned expenditure curve upward, resulting in a higher equilibrium GDP. Since the increase in investment is $2 trillion, the new equilibrium GDP will be the previous equilibrium GDP of $6 trillion plus the additional $2 trillion in investment, equaling $8 trillion.

In the Above Figure, AE0 is the Aggregate Planned Expenditure

In the Above Figure, AE₀is the Aggregate Planned Expenditure