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The government has decided to stimulate the economy by spending money to update the fleet of vehicles owned by the government. The government will spend
The government has decided to stimulate the economy by spending money to update the fleet of vehicles owned by the government. The government will spend $30 billion on these new vehicles and will borrow to pay for this purchase. The economy is currently in a short-run equilibrium at $700 billion. Savings by consumers will increase by $20 billion. How will the economy change? Consumption will change by +$20 billion . Government spending will change by -$30 billion . Net investment will change by +$30 billion
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