Suppose a country institutes an investment tax credit and that leads to an initial increase in investment spending of $100 billion. Suppose the multiplier is 1.5 and the economy's real GDP is $5,000 billion. This action is
A) expansionary and will shift the aggregate demand curve to the right by $750 billion.
B) expansionary and will shift the aggregate demand curve to the right by $150 billion.
C) expansionary and will shift the aggregate demand curve to the left by $7500 billion.
D) expansionary and will shift the aggregate demand curve to the left by $150 billion.
Ans: B) expansionary and will shift the aggregate demand curve to the right by $150 billion.
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