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Suppose that the economy is initially in long-run equilibrium at a point where real GDP is $40 billion and the price level is 8. Now,
Suppose that the economy is initially in long-run equilibrium at a point where real GDP is $40 billion and the price level is 8. Now, suppose that there is a $5 billion increase in government purchases and the government purchases multiplier equals 4. Part 2 If government purchases increase, then the aggregate demand curve will shift to the right . Part 3 In particular, the aggregate demand curve will shift to the right by
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