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Suppose the Economy Is Initially in Equilibrium at Potential GDP

question 62

Essay

Suppose the economy is initially in equilibrium at potential GDP = $100 billion and investment increases by $8 billion.If the MPC in this economy is 0.8,what will happen to real GDP? Draw an aggregate expenditure graph showing this change in investment and real GDP.


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A steroid hormone that plays a key role in the development of male reproductive tissues and the promotion of secondary sexual characteristics.

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The fundamental human need or desire for sexual activity; another term often synonymous with libido.

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