Why a change in one component of aggregate demand

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Explain the short-run impact of each of the following.
A discovery that makes cold fusion a reality, greatly reducing the cost of producing energy
An increase in the payroll tax

Suppose that virtually everyone in the United States decides to take life a little easier, and the length of the average workweek falls by 25%. How will that affect GDP? Per capita GDP? How will it affect economic welfare?

Explain why a change in one component of aggregate demand will cause the aggregate demand curve to shift by a multiple of the initial change.

Reference no: EM13205652

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