Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. If we extend the model to that investment is an inverse function of the rate of interest, what will happen to the employment if interest rates are cut? a. Indeterminate b. Neither c. Higher employment d. Lower employement.

Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. If we extend the model to that investment is an inverse function of the rate of interest, what will happen to the employment if interest rates are cut? a. Indeterminate b. Neither c. Higher employment d. Lower employement.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 7QP

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