Essay
The figure below shows the effect of a 2001 increase in government purchases on the hypothetical path of real GDP compared to the path of potential GDP (the baseline)between 2001 and 2005. 
(A)Using the AD curve and IA line analysis,explain what is occurring between 2001 and 2002.
(B)Using the AD curve and IA line analysis,explain what is occurring between 2002 and 2004.
(C)Using the AD curve and IA line analysis,explain what is occurring between 2004 and 2005.
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(A) As a result of the increase in gover...View Answer
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