Question: 1. Please answer following parts in this question. (30 marks)
- Use the Keynesian cross (aggregate demand model) to show the effect of an increase in autonomous investment on the economy. (10 marks)
- Discuss the path of the economy as it adjusts to the new medium-run equilibrium. Why does the economy not continue to expand? (10 marks)
- Why is investment spending likely to be more volatile than consumption spending? (10 marks)
