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-(Figure: Planned Aggregate Expenditures Curve II)Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function rises by $100.The equilibrium level of real GDP would rise by:

Question

Use the following to answer questions: 
-(Figure: Planned Aggregate Expenditures Curve II)Use Figure: Planned Aggregate Expenditures Curve II.Suppose that the consumption function rises by $100.The equilibrium level of real GDP would rise by:

Quizplus · Accepted Answer

The increase in the consumption function by $100 will lead to a multiplied effect on the equilibrium level of real GDP due to the multiplier effect. If the multiplier is 2.5, then the increase in real GDP would be $100 * 2.5 = $250.

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