Figure 16-12
-Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD1 to AD2.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion.

Question

Figure 16-12 
-Refer to Figure 16-12.An increase in government purchases of $200 billion causes aggregate demand to shift ultimately from AD1 to AD2.Assuming a constant price level,the difference in real GDP between point A and point B will be ________ $200 billion.

Quizplus · Accepted Answer

This is because as government purchases increase, aggregate demand shifts from AD1 to AD2, leading to an increase in real GDP from Y1 to Y2. The difference in real GDP between point A and point B is the distance between the two vertical lines drawn from these points on the horizontal axis, which is greater than $200 billion.

Figure 16-12 -Refer to Figure 16-12.An Increase in Government Purchases of $200