Suppose that,because of a decline in investment expenditures in a hypothetical economy in the year 2001,real GDP follows the path ABCDE in the figure below.If a discretionary policy were used that was timely and not too little or too large,show how the path in the figure would change.Use the IA-AD curve analysis to show the consequence of this discretionary fiscal policy.

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The Answer of Suppose that,because of a decline in investment expenditures in a hypothetical economy in the year 2001,real GDP follows the path ABCDE in the figure below.If a discretionary policy were used that was timely and not too little or too large,show how the path in the figure would change.Use the IA-AD curve analysis to show the consequence of this discretionary fiscal policy.

Suppose That,because of a Decline in Investment Expenditures in a Hypothetical