Fiscal policy the money market and aggregate demand, Business Economics

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Fiscal policy the money market and aggregate demand

Fiscal policy, the money market, and aggregate demand Consider a hypothetical economy in which households spend $0.75 of each additional dollar they earn and save the remaining $0.25. The following graph shows the economy's initial aggregate demand curve ( ). Suppose the government increases its purchases by $3.75 billion.

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Business Economics: Fiscal policy the money market and aggregate demand

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