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Macmillan Learning
The accompanying graph represents the Keynesian cross for a
country,
where the planned aggregate spending line (Planned
AE) is graphed against a 45° line. Suppose that there is an
autonomous decrease in aggregate spending of $40 billion in
this country
.
a. Show this change on the graph (you can drag and shift the
whole line or
either of the endpoints) and answer the
following two questions.
b. What is the initial unplanned inventory investment? If the
number is negative, be sure to include a negative sign.