^{Let aggregate demand be summarized by}^Y⁼^k0 ⁺^k1^{M - P}⁾^{and aggregate} supply by P = P^{^}+ cY - Y*). A change in government spending is captured A) only c. B) ^only^k1^. C) ^only^k0^. D) ^b^oth^k0 ^and^k1^. E) none of the above.

Question

Quizplus · Accepted Answer

A change in government spending affects the intercept of the aggregate demand curve, which is represented by k0 in the equation.

Let Aggregate Demand Be Summarized by Y = k0

^{Let Aggregate Demand Be Summarized by}^Y⁼^k0