Optimistic firms in the long run

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Optimistic Firms in the long Run

Suppose the economy were operating at full employment and firms become increasingly optimistic about the future. They increase their investment spending; graphically, that means that their investment schedule shifts to the right. (Draw a graph to explain the shift)

What happens to real GDP in the short run?

Describe what happens to interest rates, investment, and real GDP in the long run.

How is the investment boom self-correcting?

Reference no: EM131118699

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