8. Refer to the diagrams. The multiplier associated with fiscal policy thatincreases aggregate demand from AD1 to AD2 is less in graph b than in abecause: *ASASAD, AD,AD, AD2X YZReal GDP0.X YZReal GDP(a)(b)Graph a represents a closed economy while b depicts an open economy.Inflation occurs in b and not in aThe economy is in the vertical range of aggregate supply in a and not inb.Graph a represents an open economy while b depicts a closed economy.Price levelPrice level

When Aggregate demand moves from AD1 to AD2 in graph A, the economy is still in range of subdued…

Answered: 8. Refer to the diagrams. The…

8. Refer to the diagrams. The multiplier associated with fiscal policy that increases aggregate demand from AD1 to AD2 is less in graph b than in a because: *

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 2CQQ

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