Many students are impressed by the Keynesian multiplier effect of government spending when they first learn macroeconomics. As they learn more, however, they realize that the multiplier effect cannot be so large. Using an IS-LM and AD- AS framework, explain the (at least two) factors that reduce the effect of government spending
Many students are impressed by the Keynesian multiplier effect of government spending when they first learn macroeconomics. As they learn more, however, they realize that the multiplier effect cannot be so large. Using an IS-LM and AD- AS framework, explain the (at least two) factors that reduce the effect of government spending
Chapter1: Making Economics Decisions
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![Many students are impressed by the
Keynesian multiplier effect of government
spending when they first learn
macroeconomics. As they learn more,
however, they realize that the multiplier effect
cannot be so large. Using an IS-LM and AD-
AS framework, explain the (at least two)
factors that reduce the effect of government
spending](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F719c0ed2-1018-436b-aef2-2d5cb35fd1fc%2Fddfde425-eb67-4308-9ab4-15da144f2378%2F9ugke76_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Many students are impressed by the
Keynesian multiplier effect of government
spending when they first learn
macroeconomics. As they learn more,
however, they realize that the multiplier effect
cannot be so large. Using an IS-LM and AD-
AS framework, explain the (at least two)
factors that reduce the effect of government
spending
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