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.

MACROECONOMICS FOR TODAY
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ISBN:9781337613057
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Chapter5: Gross Domestic Product
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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.
 
(?
Consumption Function
Consumption Function
A
REAL DISPOSABLE INCOME (Billions of dollars)
REAL CONSUMER SPENDING (Billions of dollars)
Transcribed Image Text:(? Consumption Function Consumption Function A REAL DISPOSABLE INCOME (Billions of dollars) REAL CONSUMER SPENDING (Billions of dollars)
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