-Refer to Exhibit 10-6.If government purchases decrease,it follows that

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EWhen government purchases decrease, the total expenditures (TE) curve will shift downward because government spending is a component of aggregate demand. This shift could potentially move the economy to a lower point on the TE curve, such as point 3, indicating a decrease in total expenditures and, consequently, a decrease in equilibrium output or Real GDP. Therefore, at the new equilibrium position, Real GDP will necessarily be lower, reflecting the decrease in government spending and its impact on the economy.