If the economy experiences an increase in GDP of $200 billion due to a rise in investment spending, which factor is crucial for calculating the required change in investment spending?

To understand how an increase in GDP relates to investment spending, we need to look at the concept of the multiplier effect. The multiplier tells us how much GDP will change based on a change in investment spending. For example, if the multiplier is 2, and investment spending increases by $100 billion, GDP would rise by $200 billion. Therefore, to find the necessary change in investment spending that leads to the $200 billion increase in GDP, we would divide the GDP change by the multiplier. If the multiplier is 2, then we would need an increase in investment spending of $100 billion to achieve that GDP growth.