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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 31

Extract B (lines 14–16) states: 'An expansionary fiscal policy, characterized by a major increase in government spending on national infrastructure projects, has directly increased injection levels into the circular flow of income.'

Draw an AD/AS diagram to show the impact of an increase in government spending on both the price level and real national output.

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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts