200 AGGREGATE EXPENDITURE (Billions of dollars) 20 20 40 60 660 80 80 100 120 140 160 180 40 AE Line MPC=0.70 45-Degree Line 0 0 20 40 60 80 100 120 140 160 180 200 REAL GDP (Billions of dollars) New AE Line + New Equilibrium billion. In the second billion. Therefore, a higher MPC In the first economy (with MPC = 0.5), the $30 billion decrease in investment causes equilibrium output to decrease by $ economy (with MPC = 0.70), the $30 billion decrease in investment causes equilibrium output to decrease by $ is associated with a multiplier.
200 AGGREGATE EXPENDITURE (Billions of dollars) 20 20 40 60 660 80 80 100 120 140 160 180 40 AE Line MPC=0.70 45-Degree Line 0 0 20 40 60 80 100 120 140 160 180 200 REAL GDP (Billions of dollars) New AE Line + New Equilibrium billion. In the second billion. Therefore, a higher MPC In the first economy (with MPC = 0.5), the $30 billion decrease in investment causes equilibrium output to decrease by $ economy (with MPC = 0.70), the $30 billion decrease in investment causes equilibrium output to decrease by $ is associated with a multiplier.
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 3.7P
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