Figure 16-11
-Refer to Figure 16-11.If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph below,the difference in real GDP between point A and point B will be

Question

Figure 16-11 
-Refer to Figure 16-11.If government purchases increase by $100 billion and lead to an ultimate increase in aggregate demand as shown in the graph below,the difference in real GDP between point A and point B will be

Quizplus · Accepted Answer

The difference in real GDP between point A and point B will be greater than $100 billion, as shown by the steepness of the aggregate demand curve. This indicates a high responsiveness to changes in government spending, resulting in a multiplier effect that amplifies the initial increase in demand.

Figure 16-11 -Refer to Figure 16-11.If Government Purchases Increase by $100 Billion