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Suppose the C/Y Line Shifts to the Right Because of a Change

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Essay

Suppose the C/Y line shifts to the right because of a change in attitude about the future. At the same time, because of political pressure, the government share of GDP declines, with the result that the interest rate stays constant.
(A) If the investment share is the anly thing that affects prowth in the system, what wril happen to growth?
(B) If the cansumption share increased by 5 percent what must heve heppened to the goverrment share?
(C) Suppose that when the C/rline shifted to the right and the government cut spending the interest rate actually fell. What happened to each of the fau shares in this case?


Definitions:

Ice Cream

A frozen dessert made from dairy products, such as milk and cream, often combined with fruits, flavors, or other ingredients.

Frozen Yogurt

A dessert made from yogurt and sometimes other dairy products, frozen to a soft consistency, often served as a healthier alternative to ice cream.

Price

The cash amount presumed, required, or allocated in remuneration for something.

Supply Curve

The supply curve illustrates the relationship between the price of a good or service and the quantity of that good or service that a seller is willing and able to supply.

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