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Consider three economies, A, B, and C. Aggregate desired expenditure (AE) in economy A is composed of only consumption expenditures and Investment, in economy B
Consider three economies, A, B, and C. Aggregate desired expenditure (AE) in economy A is composed of only consumption expenditures and Investment, in economy B is composed of consumption expenditures, investment expenditures, and government purchases, and in economy C is composed of all those expenditures in Economy B plus net exports expenditures.
- If a similar change in autonomous expenditures is introduced in the three economies, in which one you expect a bigger change in equilibrium GDP?
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