Suppose that a new free trade agreement allows the economy to import cheaper goods from overseas, thereby decreasing the general price level. Adjust the following graph by either shifting the consumption function curve or the initial point on the consumption function curve (A) to illustrate the impact of a fall in the price level.
Suppose that a new free trade agreement allows the economy to import cheaper goods from overseas, thereby decreasing the general price level. Adjust the following graph by either shifting the consumption function curve or the initial point on the consumption function curve (A) to illustrate the impact of a fall in the price level.
Chapter5: Gross Domestic Product
Section: Chapter Questions
Problem 4SQP
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Suppose that a new free trade agreement allows the economy to import cheaper goods from overseas, thereby decreasing the general price level.
Adjust the following graph by either shifting the consumption function curve or the initial point on the consumption function curve (A) to illustrate the impact of a fall in the price level.
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