= Consider a simple economy with a simple multiplier 1/(1-z). Assume the economy's investment now vary...
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= Consider a simple economy with a simple multiplier 1/(1-z). Assume the economy's investment now vary with the marginal propensity to invest 8. The economy's Investment function is now specified as; I lo, lo is the autonomous investment. Explain what will happen to the firm's multiplier. Now suppose the firm changes the investment function to I, Io + OY, carefully justify how this change could affect the firm's AE. (Illustrate your answer on a graph and indicate the assumption you need on for your analysis?). = = Consider a simple economy with a simple multiplier 1/(1-z). Assume the economy's investment now vary with the marginal propensity to invest 8. The economy's Investment function is now specified as; I lo, lo is the autonomous investment. Explain what will happen to the firm's multiplier. Now suppose the firm changes the investment function to I, Io + OY, carefully justify how this change could affect the firm's AE. (Illustrate your answer on a graph and indicate the assumption you need on for your analysis?). =
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Related Book For
Principles of Money Banking and Financial Markets
ISBN: 978-0321339195
12th edition
Authors: Lawrence S. Ritter, William L. Silber, Gregory F. Udell
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