In the model SIM of chapter 3 of the book of Godley, Wynne, and Marc Lavoie. 2012. Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. 2nd ed. 2012 edition., starting from a stationary state simulate the effect of an increase in government expenditure under four variations of the model:a model where expected disposable income is always constant and equal to 20: Y De = 20Discuss the trajectory of output from the original stationary state to the new one. Figure 3.6: Impact on Y and Y* of an increase in G when YDe remains fixed130120110100908060657075808590Steady state solution for Income YIncome Y9500 Figure 3.6: Impact on Y and Y* of an increase in G when YDe remains fixed2402001601208040060657075808590Wealth HDisposable Income YDConsumption CExpected disposable Income YDe9500

In the SIM model of chapter 3, an increase in government expenditure (G) leads to an increase in…

Answered: In the model SIM of chapter 3 of the…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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In the model SIM of chapter 3 of the book of Godley, Wynne, and Marc Lavoie. 2012. Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. 2nd ed. 2012 edition., starting from a stationary state simulate the effect of an increase in government expenditure under four variations of the model:

a model where expected disposable income is always constant and equal to 20: Y De = 20

Discuss the trajectory of output from the original stationary state to the new one.

Figure 3.6: Impact on Y and Y* of an increase in G when YDe remains fixed
130
120
110
100
90
80
60
65
70
75
80
85
90
Steady state solution for Income Y
Income Y
95
00

Figure 3.6: Impact on Y and Y* of an increase in G when YDe remains fixed
240
200
160
120
80
40
0
60
65
70
75
80
85
90
Wealth H
Disposable Income YD
Consumption C
Expected disposable Income YDe
95
00

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