The following graph depicts a macro equilibrium. Answer the questions based on the information in the graph (d) If the multiplier were equal to 4, how much additional investment would be needed to increase aggregate demand by the amount of the initial GDP gap? (e) Illustrate the changes in autonomous investment and induced consumption that occur in(d). (f) What happens to prices when aggregate demand increases by the amount of the initial GDP gap
The following graph depicts a macro equilibrium. Answer the questions based on the information in the graph (d) If the multiplier were equal to 4, how much additional investment would be needed to increase aggregate demand by the amount of the initial GDP gap? (e) Illustrate the changes in autonomous investment and induced consumption that occur in(d). (f) What happens to prices when aggregate demand increases by the amount of the initial GDP gap
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following graph depicts a macro equilibrium. Answer the questions based on the
information in the graph
(d) If the multiplier were equal to 4, how much additional investment would be needed to
increase aggregate demand by the amount of the initial
(e) Illustrate the changes in autonomous investment and induced consumption that occur in(d).
(f) What happens to prices when aggregate demand increases by the amount of the initial
GDP gap?
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