Question

Investment Demand 0 $75 150 225 Investment (s) 0 $50 100 150 Investment (S) AS $150) AD, (I-$100) Real GDP Refer to the graphs above, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. What is the desired level of investment spending in this economy if it is to achieve a noninflationary full-employment level of real GDP? investment spending associated with each curve. All figures are in billions. What is the desired level of investment spending in this economy if it is to achieve a noninflationary full-employment level of real GDP? Multiple Choice O so $100 $150 $225

Answer 1

Option B.

The quantity of full employment GDP in this economy is represented by Qf. At this level of aggregate demand at AD2, the investment demand in the economy is equal to $100. Thus, the desired level of investment spending in this economy to achieve a non-inflationary full-employment level of real GDP is equal to $100.