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January 8th, 2018

The question is: Consider the economy where the AS curve is flat. Show how the aggregate demand shifts when spending increases by 1 unit. (both in the expenditure schedule graph and the AD-AS graph)My reasoning is that the spending increases by 1 unit which means consumption increases. This means that the Demand increases, is this right? My AD-AS graph just has the demand curve shifting right, and my expenditure schedule just has right-ward movement along the consumption function. Does this make sense/ am I on the right track?

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