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10 questions from this quiz
Horizontal: Income; Vertical: Expenditure
All points where expenditure equals income
AD=C+I+G+(X−M)AD = C + I + G + (X - M)AD=C+I+G+(X−M)
C=C0+mpc×YC = C_0 + \text{mpc} \times YC=C0+mpc×Y
Due to autonomous spending at zero income
MPC < 1, so some income is saved not spent
Rise in investment or government spending
Makes the AD line steeper
Changes in AD cause larger changes in income
Equilibrium income below full employment
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