Given a simple Keynesian spending multiplier of 2, how will GDP (Y) change when business investment increases by $15 billion, exports increase by $5 billion, and government spending drops by $10 billion? Y increases by $20 billion. Y decreases by $20 billion. Y decreases by $10 billion. Y remains unchanged.
Given a simple Keynesian spending multiplier of 2, how will GDP (Y) change when business investment increases by $15 billion, exports increase by $5 billion, and government spending drops by $10 billion? Y increases by $20 billion. Y decreases by $20 billion. Y decreases by $10 billion. Y remains unchanged.
Chapter19: The Keynesian Model In Action
Section: Chapter Questions
Problem 17SQ
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Given a simple Keynesian spending multiplier of 2, how will GDP (Y) change when business investment increases by $15 billion, exports increase by $5 billion, and government spending drops by $10 billion?
- Y increases by $20 billion.
- Y decreases by $20 billion.
- Y decreases by $10 billion.
- Y remains unchanged.
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