If the multiplier in an economy is 5, a $20 billion increase in net exports will:
A)increase GDP by $100 billion.
B)reduce GDP by $20 billion.
C)decrease GDP by $100 billion.
D)increase GDP by $20 billion.

Question

Quizplus · Accepted Answer

The multiplier effect amplifies the initial change in spending. With a multiplier of 5, a $20 billion increase in net exports will increase GDP by 5 times that amount, resulting in a $100 billion increase in GDP.

If the Multiplier in an Economy Is 5, a $20