The figure given below depicts the macroeconomic equilibrium in a country. Figure 11.3 AS, 400+ 200+ AD: AD 200 400 600 800 Real ODP (dolars) Refer to Figure 11.3. Assume that the increase in aggregate demand from AD; to AD, was the result of government spending that was financed by borrowing. Assuming that the Ricardian equivalence holds and people expect taxes to rise in future, the equilibrium income will be: O S700. O less than S700. O $800. O less than $500. O more than $800. Price Level (dollars)

The figure given below depicts the macroeconomic equilibrium in a country. Figure 11.3 AS, 400+ 200+ AD: AD 200 400 600 800 Real ODP (dolars) Refer to Figure 11.3. Assume that the increase in aggregate demand from AD; to AD, was the result of government spending that was financed by borrowing. Assuming that the Ricardian equivalence holds and people expect taxes to rise in future, the equilibrium income will be: O S700. O less than S700. O $800. O less than $500. O more than $800. Price Level (dollars)

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 4TY

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