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Assuming the economy initially balance at A point (Y0, i0) with sugar and sugar LM0 IS0, increased government spending is a demand President, with DG interest rates have yet to catch up with the changes, the line IS moving to production levels Y1 '. As when the market equilibrium output goods increased to Y1 ' then the monetary demand started rising to serve the objective of transactions and interest rate increases. Therefore, after rising government spending instead of the economy reached the level of output at Y1 ' with interest is i0, the balance in C (Y1, i1) due to the influence of the effect overwhelms the investment. The economy reaches equilibrium on the market goods and new currency in C (Y1, i1) with output and interest rates are higher than the balance of the original equilibrium point a.
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