Question
Consider the graphical representation of the Keynesian cross for a hypothetical country, where the planned aggregate spending line is graphed against the 4545 line. Suppose
Consider the graphical representation of the Keynesian cross for a hypothetical country, where the planned aggregate spending line is graphed against the 4545 line. Suppose that, in this country, there is an autonomous increase in aggregate spending of $20billion$20billion. Show this change on thegraph.
Planned aggregate spending (billions of dollars)Real GDP (billions of dollars)02040608010012014016018020002040608010012014016018020045 degree linePlanned AE
What is the initial unplanned inventory investment? If the number is negative, be sure to include a negativesign.
initial unplanned inventory investment:$
billionbillion
After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negativesign.
total change in real GDP:$
billion
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