Macroeconomics
Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 28.4, Problem 3RQ
To determine

Identify the short-run changes in the real GDP due to increase in autonomous expenditure, and explain whether the real GDP changes by the same scale as change in aggregate demand.

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If investment increases by $50 billion, by how much will aggregate demand change?   Aggregate demand will _______.     A. increase by less than $50 billion because there will be fewer goods and services produced for consumption expenditure   B. increase by more than $50 billion because the increase in aggregate income induces an increase in consumption expenditure   C. probably decrease by $50 billion, but it depends on the change in aggregate supply   D. increase by exactly $50 billion because investment is a component of aggregate demand
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