In each of the cases below, what happens to equilibrium output? Briefly explain how it affects the relevant component(s) of planned spending.
a. The real interest rate rises.
b. The marginal propensity to consume falls.
c. Financial frictions increase.
d. Autonomous consumption decreases.
e. Both taxes and government spending decrease by the same amount.
f. The sensitivity of net exports to changes in the real interest rate decreases.
g. The government provides tax incentives for research and development programs for firms.