According to the change you made to the loanable funds market in the previous scenario, the increase in government purchases causes the interest rate in the money market to from 6% to %. The change in the interest rate causes the level of investment spending to by billion. After the multiplier effect is accounted for, the change in investment spending will cause the quantity of output demanded to billion at each price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is known as the effect.
According to the change you made to the loanable funds market in the previous scenario, the increase in government purchases causes the interest rate in the money market to from 6% to %. The change in the interest rate causes the level of investment spending to by billion. After the multiplier effect is accounted for, the change in investment spending will cause the quantity of output demanded to billion at each price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is known as the effect.
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
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