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1. How would the size of the multiplier affect the slope of the IS curve? (Hint: In the 45°-line diagram, how does the multiplier affect the change in the equilibrium level of real GDP for a given change in the real interest rate?)

2. Other than in response to changes in real interest rates, if the aggregate expenditure line shifts in the 45°-line diagram, must the IS curve shift also? Briefly explain.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92057351

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