Suppose that the multiplier is 4,autonomous investment rises by $50 billion,and autonomous consumption falls by $50 billion at the same time.Which of the following is true?
A)Equilibrium GDP demanded will be the same,but the type of goods produced will be different.
B)Equilibrium GDP demanded will increase by $200 billion.
C)Equilibrium GDP demanded will decrease by $200 billion.
D)Equilibrium GDP demanded will increase by $400 billion.
E)Equilibrium GDP demanded will decrease by $400 billion.

Question

Quizplus · Accepted Answer

The increase in autonomous investment and the decrease in autonomous consumption offset each other, resulting in no change in equilibrium GDP demanded.

Suppose That the Multiplier Is 4,autonomous Investment Rises by $50