In the figure below, the economy is initially in equilibrium at full employment at point e. Assume

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In the figure below, the economy is initially in equilibrium at full employment at point e. Assume aggregate demand declines by 100 (shifts from AD0 to AD1).

a. What is the new short-run equilibrium?
b. How large is the simple Keynesian multiplier in this case?

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Core Macroeconomics

ISBN: 978-1464191435

3rd edition

Authors: Eric Chiang

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Question Posted: Dec 08, 2015 05:50 AM

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In the figure below, the economy is initially in equilibrium at full employment at point e. Assume

Question:

LRAS SRAS 1001 290 AD ADo 2,500 2,600 2,800 Aggregate Output (0)

Step by Step Answer:

a The shortrun equilibrium will be at point a where Q 2600 b Aggr...View the full answer

Core Macroeconomics

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