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Consider our AD/AS model with the economy starting in long-run equilibrium at a price level of 100. Autonomous investment spending increases by $250 million. At
Consider our AD/AS model with the economy starting in long-run equilibrium at a price level of 100. Autonomous investment spending increases by $250 million. At a constant price level, this would cause aggregate demand to increase by $440 million. However, due to an upward sloping aggregate supply curve, prices rise to a price level of 106, and actual GDP increases by $80 million. What is the simple multiplier in this economy? (Answer to one decimal point.) Consider our AD/AS model with the economy starting in long-run equilibrium at a price level of 100. Autonomous investment spending increases by $290 million. At a constant price level, this would cause aggregate demand to increase by $410 million. However, due to an upward sloping aggregate supply curve, prices rise to a price level of 110, and actual GDP increases by $110 million. What is the multiplier in this economy? (Answer to one decimal point.)
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