Plot the consumption function C = 100 + 0.75Y on graph paper. a. Assuming no government sector,
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a. Assuming no government sector, if planned investment spending is 200, what is the equilibrium level of aggregate output? Show this equilibrium level on the graph you have down.
b. If businesses become more pessimistic about the profitability of investment and planned investment spending falls by 100, what happens to the equilibrium level of output?
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Related Book For
Economics of Money, Banking and Financial Markets
ISBN: 978-0321598905
9th Edition
Authors: Frederic S. Mishkin
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