Refer to the information provided in Figure 9.5 below to answer the questions that follow. Figure 9.5
-Refer to Figure 9.5. If the economy is in equilibrium and the government increases spending by $200 billion, equilibrium aggregate expenditures increase to $________ billion.

Question

Refer to the information provided in Figure 9.5 below to answer the questions that follow.  Figure 9.5
-Refer to Figure 9.5. If the economy is in equilibrium and the government increases spending by $200 billion, equilibrium aggregate expenditures increase to $________ billion.

Quizplus · Accepted Answer

In the graph, the equilibrium level of aggregate expenditures is at $2,000 billion where the 45-degree line intersects the aggregate expenditures line. If the government increases spending by $200 billion, it will shift the aggregate expenditures line upward. The new equilibrium level will be at the point where the aggregate expenditures line intersects the 45-degree line, which is at $2,400 billion. Therefore, the answer is C.

Refer to the Information Provided in Figure 9