Calculate the new real GDP and explain why real GDP increases by more than $5 billion. An economy has a fixed price level, no imports, and no income taxes. An increase in autonomous expenditure of...

Calculate the new real GDP and explain why

real GDP increases by more than $5 billion.

An economy has a fixed price level, no imports,

and no income taxes. An increase in autonomous

expenditure of $200 billion increases equilibrium

expenditure by $800 billion. Calculate the multiplier and explain what happens to the multiplier

if an income tax is introduced.

The Multiplier and the Price Level (Study Plan 27.4)