In a county the expenditure multiplier is 5 By how many unit

In a county the expenditure multiplier is 5. By how many units will the equilibrium real GDP increase if investment spending increases by 200 units.

200 units

250 units

1000 units

1500 units

None of the above.

Solution

Real GDP is the economic output of a country minus the effect of inflation. This means it reports the GDP (Gross Domestic Product) as if prices never went up or down. This distinction allows you to more accurately measure how well the economy is doing. Without real GDP, it might seem like the country is producing more when actually it\'s only because prices are rising. it is an inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as \"constant-price,\" \"inflation-corrected\" GDP or \"constant dollar GDP\".

The answer is 200 units because we are no taking into accpount the increased scenario in Real GDP, which is minus inflation.