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Discussing the aggregate expenditure model

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While discussing the aggregate expenditure (AE) model, we worked with the assumption that the investment function was autonomous. If desired investment were upward sloping (with respect to actual national income), what type of impact would this have on fiscal and/or monetary policy?

As examples: Would each type of policy still be effective? Would it be more effective, or less effective? Would it impact your assessment of whether and when each should be implemented?

Reference no: EM132600933

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