In an economy with a fixed price level, autonomous spending is $20 trillion and the slope of
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In an economy with a fixed price level, autonomous spending is $20 trillion and the slope of the AE curve is 0.6.
a. What is the equation of the AE curve?
b. Calculate equilibrium expenditure. What is the value of induced expenditure at equilibrium expenditure?
c. Calculate the multiplier.
d. Calculate equilibrium expenditure if investment increases by $1 trillion.
e. Calculate the shift of the aggregate demand curve if investment increases by $1 trillion.
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