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-(Figure: Planned Aggregate Expenditures Curve III)Use Figure: Planned Aggregate Expenditures Curve III.Suppose that the consumption function shifts upwards by $100.Equilibrium real GDP will rise by:

Question

Use the following to answer questions: 
-(Figure: Planned Aggregate Expenditures Curve III)Use Figure: Planned Aggregate Expenditures Curve III.Suppose that the consumption function shifts upwards by $100.Equilibrium real GDP will rise by:

Quizplus · Accepted Answer

The upward shift in the consumption function will lead to an increase in aggregate expenditures, which will in turn lead to an increase in equilibrium real GDP. The multiplier effect will amplify the initial increase in aggregate expenditures, resulting in a larger increase in equilibrium real GDP. The correct answer is B) $400.

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