AD 45° AD₁ =C+I+G+NX the Pl Y₁ ct of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2
AD 45° AD₁ =C+I+G+NX the Pl Y₁ ct of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2
Chapter8: The Keynesian Model
Section: Chapter Questions
Problem 2SQP
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Question
![Q3.
45°
Z
Y₁
Determine the effect of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2-3
sentences.
a. The government increases its expenditure from G to G' such that G'> G.
b. The marginal propensity to consume (MPC) increases, all other things remaining constant.
AD
AD₁ =C+I+G+NX
the Pl](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdaae1bae-4d2a-4ee4-81bd-3d96a3ba312c%2F3535be61-7674-43f7-8a62-52186029eed5%2F3rffo0w_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Q3.
45°
Z
Y₁
Determine the effect of the following on the AD curve and equilibrium output Y. Draw the graph and indicate each change by showing the initial AD and Y and the corresponding changes. Explain each answer briefly in 2-3
sentences.
a. The government increases its expenditure from G to G' such that G'> G.
b. The marginal propensity to consume (MPC) increases, all other things remaining constant.
AD
AD₁ =C+I+G+NX
the Pl
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