Suppose that the economy is at full employment, the price level is 100, and the multiplier is 3. Investment increases by $100 billion. What is the immediate change in the quantity of real GDP demanded? Use the graph to answer this question. Draw the new AD curve. Label it. Draw a point to show the immediate change in the quantity of real GDP demanded. Label it 1. In the short run, does real GDP increase by more than, less than, or the same amount as the immediate change in the quantity of real GDP demanded? Answer by drawing a point at the new short-run macroeconomic equilibrium. Label it 2. 150- 140 130- 120- 110- 100- 90- 80- Price level (GDP deflator, 2009 = 100) LAS 100 70+ 700 ADO SAS 1000 800 900 1000 1100 1200 1300 1400 1500 D-LORD /billiams ofn dalla

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Question
Suppose that the economy is at full employment, the price level is 100, and the
multiplier is 3.
Investment increases by $100 billion.
What is the immediate change in the quantity of real GDP demanded?
Use the graph to answer this question.
Draw the new AD curve. Label it.
Draw a point to show the immediate change in the quantity of real GDP demanded.
Label it 1.
In the short run, does real GDP increase by more than, less than, or the same
amount as the immediate change in the quantity of real GDP demanded?
Answer by drawing a point at the new short-run macroeconomic equilibrium. Label
it 2.
150-
140-
130-
120-
110-
100-
90-
80-
Price level (GDP deflator, 2009 = 100)
LAS
100
70+
700
ADO
800
SAS
1000
900 1000 1100 1200 1300 1400 1500
DeaLODD /hillim of0000 dall
Transcribed Image Text:Suppose that the economy is at full employment, the price level is 100, and the multiplier is 3. Investment increases by $100 billion. What is the immediate change in the quantity of real GDP demanded? Use the graph to answer this question. Draw the new AD curve. Label it. Draw a point to show the immediate change in the quantity of real GDP demanded. Label it 1. In the short run, does real GDP increase by more than, less than, or the same amount as the immediate change in the quantity of real GDP demanded? Answer by drawing a point at the new short-run macroeconomic equilibrium. Label it 2. 150- 140- 130- 120- 110- 100- 90- 80- Price level (GDP deflator, 2009 = 100) LAS 100 70+ 700 ADO 800 SAS 1000 900 1000 1100 1200 1300 1400 1500 DeaLODD /hillim of0000 dall
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