Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous

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Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous consumption by $100 billion at the price level P_F. Assume MPC = 0.5.

(a) What is the new equilibrium level of real output? (Don’t forget the multiplier.)

(b) How large is the real GDP gap?

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The Macro Economy Today

ISBN: 978-1259291821

14th edition

Authors: Bradley R. Schiller, Karen Gebhardt

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Question Posted: May 03, 2018 09:24 AM

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Illustrate in the following graph the impact of a sudden decline in consumer confidence that reduces autonomous

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a 300 billion b 200 billion c Decrease Feedback a 300 billion The new equilibrium level o...View the full answer

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