Assuming that the aggregate price level is constant, the interest rate is fixed, and there are no taxes and no foreign trade, how will the aggregate demand curve shift and in what direction if the following events occur?
a] An autonomous increase in consumer spending of $25 billion; the marginal propensity to consume is 2/3
b] Firms reduce investment spending by $40 billion; the marginal propensity to consume is 0.8
c] The government increases its purchases of military equipment by $60 billion; the marginal propensity to consume is 0.6
2007-10-31
16:46:42
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1 answers
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asked by
Meezy
3
in
Social Science
➔ Economics