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Assume that the economy is initially in equilibrium at the level of real output (Y) of $5000 and an interest rate of 5%.If as a
Assume that the economy is initially in equilibrium at the level of real output (Y) of $5000 and an interest rate of 5%.If as a result of an increase in government spending of 500, the economy moves to a new equilibrium Y=$5750, r=6.5% (and given that the multiplier k=3), How much autonomous spending was crowded out due to increase in interest rates?
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