(Answered) Using the simple Keynesian model, explain and diagrammatically represent how Y changes given each…

Using the simple Keynesian model, explain and diagrammatically represent how Y changes given each of the following:a.G declinesb. Tx fallc. aonomous consumption rise Draw all the graphs
a. G declines
Explanation:
A decline in government spending (G) reduces autonomous aggregate expenditure, shifting the aggregate expenditure (AE) curve downward. Equilibrium output Y falls. The spending multiplier implies
ΔY = (1 / (1 – c)) · ΔG, so if ΔG < 0 then ΔY < 0 (c = marginal propensity to consume). AE shifts down when G declines; equilibrium Y falls (Y₀ → Y₁). b. Tx fall Explanation: A fall in taxes increases disposable income, raising consumption and shifting the AE curve upward. Equilibrium output Y rises. The tax multiplier is smaller in absolute value than the spending multiplier: ΔY = (c / (1 - c)) · (tax cut amount). Thus a tax cut increases Y by the tax multiplier times the size of the tax cut. AE shifts up when taxes fall; equilibrium Y rises (Y₀ → Y₁). The rise equals the tax multiplier times the tax cut. c. aonomous consumption rise Explanation: An increase in autonomous consumption (aonomous consumption) raises the intercept of the AE curve, shifting AE upward by the same amount. Equilibrium output Y increases. The effect on Y equals the spending multiplier times the autonomous consumption increase: ΔY = (1 / (1 - c)) · ΔC₀. AE shifts up when autonomous consumption rises; equilibrium Y increases (Y₀ → Y₁) by the spending multiplier times ΔC₀.