Refer to the information provided in Figure 8.12 below to answer the questions that follow. Figure 8.12
-Refer to Figure 8.12.Suppose the economy's aggregate expenditure line is AE1.A $10 million increase in planned investment causes aggregate equilibrium output to increase to
A)$1,010.0 million.
B)$1,016.7 million.
C)$1,125.5 million.
D)$1,215.6 million.

Question

Refer to the information provided in Figure 8.12 below to answer the questions that follow.  Figure 8.12
-Refer to Figure 8.12.Suppose the economy's aggregate expenditure line is AE1.A $10 million increase in planned investment causes aggregate equilibrium output to increase to
A)$1,010.0 million. 
B)$1,016.7 million. 
C)$1,125.5 million. 
D)$1,215.6 million.

Quizplus · Accepted Answer

According to the diagram, a $10 million increase in planned investment would shift the aggregate expenditure line from AE1 to AE2. The intersection of the AE2 line with the 45-degree line represents the new equilibrium output level, which is approximately $1,016.7 million. Therefore, the answer is B.

Refer to the Information Provided in Figure 8