Refer to the information provided in Figure 9.4 below to answer the questions that follow. Figure 9.4
-Refer to Figure 9.4.If aggregate expenditures are represented by AE2 and government spending increases by $20 billion,equilibrium aggregate output increases by $________ billion.

Question

Refer to the information provided in Figure 9.4 below to answer the questions that follow.  Figure 9.4
-Refer to Figure 9.4.If aggregate expenditures are represented by AE2 and government spending increases by $20 billion,equilibrium aggregate output increases by $________ billion.

Quizplus · Accepted Answer

The increase in equilibrium aggregate output can be calculated using the spending multiplier effect. If the multiplier is 5 (as implied by the choices), a $20 billion increase in government spending would lead to a $100 billion increase in output (20 x 5 = 100).

Refer to the Information Provided in Figure 9