Which of the following concepts is most helpful in explaining why investment increases when the interest rate falls?

Use the above figure. Which graph depicts a normal good?

A) A B) B C) C D) D

In a certain economy, when income is $1000 . consumer spending is $800 . The value of the multiplier for this economy is 2.5 . It follows that, when income is $1020, consumer spending is

a. $816 . For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand. b. $816 . For this economy, an initial increase of $100 in consumer spending translates into a $400 increase in aggregate demand. c. $812 . For this economy, an initial increase of $100 in consumer spending translates into a $250 increase in aggregate demand. d. $812 . For this economy, an initial increase of $100 in consumer spending translates into an $800 increase in aggregate demand.