An economy's AD curve is P=19-0.2Y and its AS curve is P-1.5+0.05Y. Suppose that autonomous expenditure increases by two such that the AD curve is changed to P=21-0.2Y. What is the value of the multiplier that allows for price increases? The answer is 4. please provide explanation in detail.
An economy's AD curve is P=19-0.2Y and its AS curve is P-1.5+0.05Y. Suppose that autonomous expenditure increases by two such that the AD curve is changed to P=21-0.2Y. What is the value of the multiplier that allows for price increases? The answer is 4. please provide explanation in detail.
Chapter19: The Keynesian Model In Action
Section: Chapter Questions
Problem 11SQ
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An economy's AD curve is P=19-0.2Y and its AS curve is P-1.5+0.05Y.
Suppose that autonomous expenditure increases by two such that the AD curve is changed to P=21-0.2Y. What is the value of the multiplier that allows for price increases?
The answer is 4.
please provide explanation in detail.
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