AD 45° AD₁ =C+I+G+NX the Pl Y₁ ct of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2

MACROECONOMICS FOR TODAY
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Author:Tucker
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Chapter8: The Keynesian Model
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Q3.
45°
Z
Y₁
Determine the effect of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2-3
sentences.
a. The government increases its expenditure from G to G' such that G'> G.
b. The marginal propensity to consume (MPC) increases, all other things remaining constant.
AD
AD₁ =C+I+G+NX
the Pl
Transcribed Image Text:Q3. 45° Z Y₁ Determine the effect of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2-3 sentences. a. The government increases its expenditure from G to G' such that G'> G. b. The marginal propensity to consume (MPC) increases, all other things remaining constant. AD AD₁ =C+I+G+NX the Pl
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