In the third quarter of 2008,investment in the U.S.totalled $1.4 trillion and in 2007,investment was $1.3 trillion. In addition,third quarter real GDP was $11 trillion.Suppose the MPC in the U.S.is 0.80. Ignoring the effects of imports and taxes,the multiplier is ________ and the change in investment will decrease equilibrium expenditure by ________.
A) 2; $1 trillion.
B) 5; $1 trillion.
C) 2; $200 million.
D) 5; $500 million.
Correct Answer:
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