National income rises many times higher than the increase in autonomous 4 investment. Why? What economic term is used to explain the phenomenon? Use necessary graph to explain.
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When autonomous investment increases (from 15 to 20), AD1 line shifts upward and assumes the position of A2 line which intersects 45° line at E2 making it a new equilibrium point. ... They are greater than their initial values because of investment multiplier effect.
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