What will be the new short-run equilibrium

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Reference no: EM131483162

Question: In the figure below, the economy is initially in equilibrium at full employment at point e. Assume aggregate demand declines by 100 (shifts from AD0 to AD1).

a. What will be the new short-run equilibrium?

b. How large is the simple Keynesian multiplier in this case?

Reference no: EM131483162

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