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Economics

Q. Investment demand of the AS-AD model?

Investment demand. As long as we keep nominal interest rate (and thus real interest rates) constant, there is no reason for demand for real investment to change. We will expect nominal investments to increase by the same percentage as price level.

Government consumption. G is an exogenous real variable and we expect no dependence on P by same argument as for private consumption.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9577743

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