In Figure 23.13 on page 796, the economy is initially in equilibrium at point A. Aggregate expenditure and real GDP both equal $9.6 trillion. The increase in investment of $100 billion increases aggregate expenditure to $9.7 trillion. If real GDP increases to $9.7 trillion, will the economy be in equilibrium? Briefly explain. What happens to aggregate expenditure when real GDP increases to $9.7 trillion?
Figure 23.13

Transcribed Image Text:

Real aggregate expenditure, AE (trillions of 2009 dollars) Y= AE AE2 $10.3 1. A$100 billion increase in planned investment ... 10.2 AE1 10.1 в, 10.0 9.9 E 9.8 E Potential 9.7 E real GDP 9.6 9.5 2.... results in a $400 billion increase in 9.4 equilibrium real GDP. 9.3 45° $9.4 9.6 9.8 10.0 10.2 10.4 Real GDP, Y (trillions of 2009 dollars)