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BIG ISSUES OF ECONOMIC CONCERN
Samuelson has offered the world many economic theories. One area he is widely known for is his views on the spending multiplier. Samuelson has presented a way through his aggregate demand model to demonstrate how the spending multiplier affects individual types of spending. There are several components of aggregate demand. The basis for understanding this model is as follows:
 An increase in prices causes a drop in household assets, thus causing consumers to spend less.
 Increases in domestic prices reduce exports, which causes an increase in spending on imports.
 The interest rate effect is when prices increase, as does the demand for money, thus increasing the interest rate. This forces a downward pressure on investment and purchases of durable goods.

Therefore, investment, exports and consumption are all inversely related to pricing. In Samuelson's model, government spending was the only constant. This means the......

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Approximate Word Count: 2516
Approximate Pages: 11 (250 words per double-spaced page)

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