Draw a graph of the goods market and identify the equilibrium level of GDP. Then use your graph to show the effect of each of the following changes:
a. Households become more pessimistic and decide to buy fewer new homes.
b. The government increases transfer payments without changing taxes.
c. Consumers feel wealthier and want to spend more.
d. Prices rise in the rest of the world, making U.S. exports more desirable.