Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 40 0 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 The change in government spending the multiplier effect. Initial AD -O SRAS New AD and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. ▼ the equilibrium level of real output by . The price level increase
Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 40 0 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 The change in government spending the multiplier effect. Initial AD -O SRAS New AD and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. ▼ the equilibrium level of real output by . The price level increase
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 6.13P
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