MACRO ECON 6
6th Edition
ISBN: 9780357689820
Author: MCEACHERN
Publisher: CENGAGE L
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Chapter 11, Problem 6P
To determine
the effect on the size of the spending multiplier, when the investment has an autonomous component and a component that varies directly with the level of real
Concept Introduction:
Government purchases: Government purchases are the tools of fiscal policy by which government increase or decrease the aggregate
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not use ai please
(d) Calculate the total change in qı.
Total change:
007
(sp) S
to vlijnsi
(e) B₁ is our original budget constraint and B2 is our new budget constraint after the price of good 1 (p1) increased.
Decompose the change in qı (that occurred from the increase in p₁) into the income and substitution effects. It
is okay to estimate as needed via visual inspection. Add any necessary information to the graph to support your
03
answer.
Substitution Effect:
Income Effect:
everything is in image (8 and 10) there are two images each separate questions
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