Below is a graphical representation of the keynesian cross, Ask an Expert

Management Studies

Below is a graphical representation of the Keynesian cross for some country, where the planned aggregate spending line is graphed against the 45° line. Suppose that, in this country, there is an autonomous increase in aggregate spending of $20 billion. Show this change on the graph (you can shift the whole line or just one of the endpoints) and answer the following two questions,

What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign.

After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign.

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Management Theories, Management Studies

Category:- Management Theories
Reference No.:- M91975583

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