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we assume that household consumption is negatively affected by both the autonomous consumption c0 and the marginal propensity for consumption c1 to fall. a) Analyze
we assume that household consumption is negatively affected by both the autonomous consumption c0 and the marginal propensity for consumption c1 to fall.
a) Analyze the effects of this in the 45-degree diagram (trade mark equilibrium in the IS-LM model)
b) Show instead what is happening in the AS-AD model.
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