The figure given below represents the macroeconomic equilibrium in the aggregate income and aggregate expenditure framework.Assume that MPI is equal to zero. Figure 10.4 In the figure:
C: Consumption
I₁ and I₂: Investment
G: Government Spending
X: Exports
Refer to Figure 10.4.Compute the increase in investment spending from I₁ to I₂.

Question

The figure given below represents the macroeconomic equilibrium in the aggregate income and aggregate expenditure framework.Assume that MPI is equal to zero. Figure 10.4

In the figure:
C: Consumption
I₁ and I₂: Investment
G: Government Spending
X: Exports
Refer to Figure 10.4.Compute the increase in investment spending from I₁ to I₂.

Quizplus · Accepted Answer

The increase in investment spending can be measured by the horizontal distance between I₁ and I₂ at the level of equilibrium output. This distance is equal to $200, as shown in the figure. Therefore, the correct answer is C) $200.

The Figure Given Below Represents the Macroeconomic Equilibrium in the Aggregate