Consider a hypothetical economy in which households spend 50.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD). Suppose the government increases its purchases by $3.5 billion White the green Mine (triangle symbol) on the following graph to show the aggregate demand curve (AD) after the motor effect takes place Hint: the sure the new agaregate demand curve (AD2s parallel to AD. You can see the slope of AD, by selecting it on the following graph 116 DELES 11 OUTPUT) The following graph shows the money market in equilibrium at an interest rate of 6% and a quantity of money equal to 330 billion Show the impact of the increase in government purchases on the Interest rate by sitting one or both of the curves on the following graph Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph 13 Money only 10 Money Demand Money Supply INTEREST RATE Money Demand 2 10 50 BO 20 30 40 MONEY (Bilions of dollars) Suppose that for each one-percentage-point Increase in the interest rate, the level of Investment spending declines by $0.5 billion. The change in the interest rate (according to the change you made to the money market in the previous scenario) therefore causes the level of Investment spending to After the multiplier effect is accounted for the change in Investment spending will cause the quantity of output demanded to by at each price level. The impact of an increase in government purchases on the Interest rate and the level of investment spending is known as the effect Use the purple Nne (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (AD) alter accounting for the impact of the increase in government purchases on the interest rate and the level of investment spending, Hint: Be sure your final aggregate demand curve (AD) is parallel to AD, and AD: You can see the slopes of AD, and AD by selecting them on the graph