Suppose that an economy is in equilibrium at a real GDP of $10

10 trillion at a price level of 100. An increase in autonomous expenditures of $0.20

0.20 trillion takes place. The current multiplier is 4

4. If theshort-run aggregate supply curve ishorizontal, the new equilibrium value of real GDP will be

A.

$10.80

10.80 trillion.

B.

$10.20

10.20 trillion.

C.

$0.20

0.20 billion.

D.

$0.80

0.80 trillion.

Suppose that an economy is in equilibrium at a real GDP of $10

10 trillion at a price level of 100. Theshort-run aggregate supply curve isupward-sloping and there is an increase in autonomous expenditures of $0.20

0.20 trillion. This increase in expenditures enabled the real GDP to increase to $10.50

10.50 trillion. The change in the price level has changed the multiplier to

A.

3.80

3.80.

B.

3.500

3.500.

C.

5.25

5.25.

D.

2.500

2.500.