Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD1). Suppose the government increases its purchases by $3.5 billion. Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve (AD2) is parallel to AD1. You can see the slope of AD1 by selecting it on the following graph. 116 114 AD, 112 AD 110 AD, 108 106 104 102 100 100 102 104 106 108 110 112 114 116 OUTPUT (Billions of dollars) PRICE LEVEL కక్లి క్రి
Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD1). Suppose the government increases its purchases by $3.5 billion. Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve (AD2) is parallel to AD1. You can see the slope of AD1 by selecting it on the following graph. 116 114 AD, 112 AD 110 AD, 108 106 104 102 100 100 102 104 106 108 110 112 114 116 OUTPUT (Billions of dollars) PRICE LEVEL కక్లి క్రి
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 12P
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What are the shifts of both of the graphs provided? (I need this questions to be answered ASAP!!!)
1st Blank options are fall or rise
2nd Blank options are $1 billion, $2 billion, $4 billion
3rd Blank options are increase or decrease
4th Blank options are $2 billion, $1.6 billion, $4 billion
5th Blank options are crowding out, liquidity preference, multiplier, and automatic stabilizer
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