Refer to Figure 23-3. Suppose that investment spending decreases by $5 million, decreasing aggregate expenditure and decreasing real GDP from GDP2 to GDP1. If the MPC is 0.8, then what is the change in GDP?

A natural monopoly

a. typically arises because of a patent or copyright b. is a firm that, due to economies of scale, can serve a market at lower average cost than two or more firm could c. is a Pareto improvement as compared to a perfectly competitive market d. enjoys diseconomies of scale, so average total cost falls as more output is produced e. enjoys economies of scale, so average total cost rises as more output is produced

An increase in government expenditure on goods and services

A) increases aggregate demand. B) increases the aggregate quantity demanded. C) decreases the aggregate quantity demanded. D) decreases aggregate demand.