In the figure below, the economy is initially in equilibrium at full employment at point e. Assume
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a. What is the new short-run equilibrium?
b. How large is the simple Keynesian multiplier in this case?
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LRAS SRAS 1001 290 AD ADo 2,500 2,600 2,800 Aggregate Output (0)
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a The shortrun equilibrium will be at point a where Q 2600 b Aggr...View the full answer
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