Exhibit 11-2

-Refer to the graph in the exhibit.Consider an economy characterized by the aggregate expenditure line.Suppose autonomous net taxes increased by $100.What would the equilibrium real GDP be equal to?
A) $400
B) $500
C) $600
D) $700

Question

Exhibit 11-2
 
-Refer to the graph in the exhibit.Consider an economy characterized by the aggregate expenditure line.Suppose autonomous net taxes increased by $100.What would the equilibrium real GDP be equal to?  
A) $400 
B) $500 
C) $600 
D) $700

Quizplus · Accepted Answer

Autonomous net taxes are a component of aggregate expenditure. When they increase by $100, the aggregate expenditure line shifts downward by $100. The intersection of the new aggregate expenditure line and the 45-degree line occurs at a real GDP of $500.

Exhibit 11-2 -Refer to the Graph in the Exhibit.Consider an Economy Characterized