The following graph depicts an IS curve for the economy. a. How does the output gap change

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The following graph depicts an IS curve for the economy.

image text in transcribed

a. How does the output gap change if the real interest rate rises from 1% to 3%?

b. Explain the process by which the output gap changed. How did the change in the real interest rate affect aggregate expenditure?

c. How do actual output and potential output change?

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Principles Of Economics

ISBN: 9781319330156,9781319419769

2nd Edition

Authors: Betsey Stevenson, Justin Wolfers

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Question Posted: Feb 20, 2024 01:00 AM

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The following graph depicts an IS curve for the economy. a. How does the output gap change

Question:

Real interest rate 5% 3% 1% -10% -5% IS curve 0% Output gap

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Principles Of Economics

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