In the simple Keynesian model with no government and foreign sectors, suppose that initially the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?
A) $10.5 trillion
B) $12.5 trillion
C) $12.0 trillion
D) $10.8 trillion

Question

Quizplus · Accepted Answer

The Answer of In the simple Keynesian model with no government and foreign sectors, suppose that initially the economy is in equilibrium at an output level of $10 trillion with a marginal propensity to consume of 0.8. If investment spending increases by $0.5 trillion, what is the new equilibrium output level?
A) $10.5 trillion
B) $12.5 trillion
C) $12.0 trillion
D) $10.8 trillion

In the Simple Keynesian Model with No Government and Foreign