-In the above table, there are no taxes and no imports or exports. Investment increases from $500 to $750. After the increase in investment, the new equilibrium level of output is

Question

Quizplus · Accepted Answer

The increase in investment by $250 leads to a multiplier effect on the economy's output. Assuming a simple multiplier model without taxes, imports, or exports, the multiplier effect can be calculated as 1/(1-MPC), where MPC is the marginal propensity to consume. Without specific MPC values, we can't calculate the exact multiplier effect. However, the question implies a direct relationship between investment increase and output. Typically, an increase in investment leads to a more than proportional increase in total output due to the multiplier effect. Therefore, the new equilibrium level of output would increase by more than the $250 increase in investment, making $6,000 a plausible new equilibrium if the initial output was $5,000 and considering the proportional impact of the investment on the economy.

-In the Above Table, There Are No Taxes and No