Question in the figure below the economy is initially in, Ask an Expert

Economics

Question: In the figure below, the economy is initially in equilibrium at full employment at point e. Assume aggregate demand declines by 100 (shifts from AD0 to AD1).

a. What will be the new short-run equilibrium?

b. How large is the simple Keynesian multiplier in this case?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92291898

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