If actual real GDP is greater than the equilibrium level of real GDP (i.e., the aggregate expenditure function
is below the 45-degree line), how is equilibrium restored?
11. When aggregate expenditure increases, why is there a multiple expansion of income and real GDP? Trace
the multiplier effect through the first four rounds when there is an increase in aggregate expenditure of $40
billion and the marginal propensity to consume is 0.75.
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