Econ 4th Edition by William McEachern

Exercise 2

Summarize the relationship between the aggregate expenditure line and the aggregate demand curve
(Shifts of Aggregate Demand) Assume the simple spending multiplier equals 3. Determine the size and direction of any changes of the aggregate expenditure line, real GDP demanded, and the aggregate demand curve for each of the following changes in spending:
a. Spending rises by $8 billion at each income level.
b. Spending falls by $5 billion at each income level.
c. Spending rises by $20 billion at each income level.