Investment spending rises by $200. Make a table showing the effect on I, C, and GDP for each of 3 rounds and the total effect after all possible rounds are completed if the MPC = 0.6 Use the table I present in my video lectures #1 and #2 as your guidefor format. Draw an AD/AS diagram showing the effect of the above on real GDP if we are far to the left of QN so the SRAS curve is flat. Be sure to include the numbers from the table on your diagram in their correct places. Start with AD0 and Q0, then show the effect of rounds 1 and 2 with AD1, Q1, AD2, and Q2. After you have done the first 2 rounds, skip ahead to showing the final AD curve and the final Q (ADF and QF). Remember to include the numerical distance covered from Q0 to QF on your diagram. I did this in video 2, so review that help you with this. Think carefully on whether the AD curve is shifting to the right or to the left. Remember, shifts to the right are increases and to the left are decreases.
Investment spending rises by $200. Make a table showing the effect on I, C, and
for format.
Draw an AD/AS diagram showing the effect of the above on real GDP if we are far to the left of QN so the SRAS curve is flat. Be sure to include the numbers from the table on your diagram in their correct places. Start with AD0 and Q0, then show the effect of rounds 1 and 2 with AD1, Q1, AD2, and Q2. After you have done the first 2 rounds, skip ahead to showing the final AD curve and the final Q (ADF and QF). Remember to include the numerical distance covered from Q0 to QF on your diagram. I did this in video 2, so review that help you with this. Think carefully on whether the AD curve is shifting to the right or to the left. Remember, shifts to the right are increases and to the left are decreases.
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