In the economy of Solow, thesimplemultiplier is 4.However, in this economy, more spending raisesprices.If a company spends $100 million on a factory, how much couldrealGDP increase eventually?

Select one:

a.

$500 million

b.

$600 million

c.

None of these choices are correct

d.

$300 million

e.

Real GDP could have increased by any of these amounts

f.

$400 million