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Decrease in consumer spending on output

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Reference no: EM131063610

Due to a downturn in the economy, unemployment has caused a decrease in consumer spending. 

  1. Use a correctly labeled AD/AS graph to illustrate the short-run effect of the decrease in consumer spending on output and price level. Explain the impact on employment. 
  2. Identify two (2) fiscal policy actions that would correct the problem in the economy. Explain each policy's impact on AD. 

Reference no: EM131063610

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