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e) Examine the graph above. Suppose that government increases its spending, shifting the aggregate expenditure line upwards. GDP increases from GDP, to GDP, and

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e) Examine the graph above. Suppose that government increases its spending, shifting the aggregate expenditure line upwards. GDP increases from GDP, to GDP, and this amount is $550 billion. If the MPC is 0.8, calculate the difference between the points N and L to find out by how much the government spending changed. AE (trillions of dollars) 45 GDP, GDP, Y = AE AE, AE Real GDP, Y (trillions of dollars)

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