Use the table below to answer the following questions.
Table 11.3.1
The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld.

-Refer to Table 11.3.1.If investment increases by $25 billion, the real GDP becomes
A)$525 billion.
B)$725 billion.
C)$675 billion.
D)$600 billion.
E)$625 billion.

Question

Use the table below to answer the following questions.
Table 11.3.1
The following table shows the relationship between aggregate planned expenditure and real GDP in the hypothetical economy of Econoworld.
 
-Refer to Table 11.3.1.If investment increases by $25 billion, the real GDP becomes
A)$525 billion. 
B)$725 billion. 
C)$675 billion. 
D)$600 billion. 
E)$625 billion.

Quizplus · Accepted Answer

Without the specific details from Table 11.3.1, we can deduce the correct answer through understanding the multiplier effect in macroeconomics. An increase in investment leads to a larger increase in GDP due to the multiplier effect. The exact answer depends on the multiplier's value, which is not provided here. However, given the options, the only plausible outcome after a $25 billion increase in investment is a new GDP value that reflects this increase, adjusted by the multiplier effect. Since the exact multiplier and initial GDP are not provided, a precise explanation can't be given, but option E ($625 billion) is selected based on the assumption it's the correct outcome of the investment increase.

Use the Table Below to Answer the Following Questions