Consider the following multiplier model diagram:
Is the income level of Y0 an equilibrium level of income? If yes,explain why.If not,explain how the economy will get to equilibrium.
Definitions:
Substitute Goods
Products or services that can be used in place of each other, satisfying the same consumer needs or desires.
Complementary Goods
Products or services that are used together, where the use or consumption of one enhances the value of the other.
Demand SHIFT
A change in the market demand curve, where at every price level, the quantity demanded of a good increases or decreases due to factors other than its price such as consumer preferences, income, or the price of other goods.
Complement
A good whose demand increases when the price of another good decreases. Examples include a parking lot and shopping mall or a hamburger and a hamburger bun.
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