Assume that people experience a one-time 50 unit increase in their consumption .In this case
A)equilibrium income will rise by 50 units times the investment multiplier.
B)equilibrium income will rise by 50 units.
C)equilibrium income will rise by 50 units times the tax multiplier.
D)equilibrium income will not change because this increase is temporary.

Question

Quizplus · Accepted Answer

According to the investment multiplier formula, equilibrium income will rise by the initial change in spending multiplied by the investment multiplier. Therefore, equilibrium income will rise by 50 units times the investment multiplier, assuming there are no leakages (such as taxes or imports).

Assume That People Experience a One-Time 50 Unit Increase in Their