The economy is in equilibrium, TP = TE, and Real GDP is $2,000 billion. The MPC is 0.75, the multiplier is operative, and idle resources exist at each expenditure round. Autonomous investment spending falls by $10 billion. As a result, the TE curve shifts __________, inventory levels unexpectedly __________, business firms __________ the quantity of goods and services they produce, and Real GDP
__________ by __________.
A) downward; rise; decrease; falls; $7.5 billion
B) downward; fall; increase; rises; $40 billion
C) downward; rise; decrease; falls; $40 billion
D) upward; rise; decrease; falls; $40 billion
E) downward; fall; decrease; falls; $7.5 billion
C
Economics