In each case, state the direction of the change and give a formula for the size of the impact. a. An increase in government purchases b. An increase in taxes c. Equal-sized increases in both government purchases and taxes

In each case, state the direction of the change and give a formula for the size of the impact. a. An increase in government purchases b. An increase in taxes c. Equal-sized increases in both government purchases and taxes

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Use the Keynesian cross model to predict the
impact on equilibrium GDP of the following.
In each case, state the direction of the change
and give a formula for the size of the impact.
a. An increase in government purchases
b. An increase in taxes
c. Equal-sized increases in both government
purchases and taxes

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