A shift in the investment schedule (caused by changes in expected rates of return or changes in
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A shift in the investment schedule (caused by changes in expected rates of return or changes in interest rates) shifts the aggregate expenditures curve and causes a new equilibrium level of real GDP. Real GDP changes by more than the amount of the initial change in investment. This multiplier effect (ΔGDP/Δ I g ) accompanies both increases and decreases in aggregate expenditures and also applies to changes in net exports ( X n ) and government purchases ( G ).
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Economics Principles Problems And Policies
ISBN: 9780073511443
19th Edition
Authors: Campbell Mcconnell ,Stanley Brue ,Sean Flynn
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