For the following problem, assume these requirements exists. All banks are fully loaned up, there are no excess reserves, and desired excess reserves are always zero. The money multiplier = 10. At a 3% interest rate, investment $120 billion. At a 4% interest rate, investment $80 billion. At a 5% interest rate, investment is $30 billion. The investment multiplier = 4. The initial equilibrium level of real GDP is $10 trillion. The equilibrium rate of interest is 4 percent. Then, the Federal Reserve determines there is an recessionary gap. It changes the money supply, which in turn changes the market rate of interest by 1 percentage point. As a result, what is the new amount of real GDP? (in trillions)

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