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In the above figure, if the slope of the aggregate expenditure function is 0.75, to shift the aggregate demand from AD1 to AD2 the government needs to decrease its autonomous expenditure by

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 4.8P

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Question

Price level (GDP deflator, 2000 = 100)
130
120
110
100
90
0
1) 0.2.
2) 0.4.
3) 0.1.
9.6
4) 0.8.
B
AD2
A
In the above figure, if the slope of the aggregate expenditure function is 0.75, to
shift the aggregate demand from AD1 to AD2 the government needs to decrease its
autonomous expenditure by
AD₁
ADO
9.8 10.0 10.2 10.4 10.6
Real GDP (trillions of 2000 dollars)

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