Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian model change? How does that shift the expenditure schedule? What happens to output as a result?) (a) Business confidence increases (b) The stock market declines (c) Credit market conditions become easier (d) The US dollar depreciates relative to the Euro (e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show how this affects the US economy)
Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian model change? How does that shift the expenditure schedule? What happens to output as a result?) (a) Business confidence increases (b) The stock market declines (c) Credit market conditions become easier (d) The US dollar depreciates relative to the Euro (e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show how this affects the US economy)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Step 1: Define economic analysis
VIEWStep 2: Examine what happens when business confidence increase
VIEWStep 3: Examine what happens when the stock market tumbles
VIEWStep 4: Examine what happens when credit becomes more accesible
VIEWStep 5: Examine what happens when the home dollar depreciates
VIEWStep 6: Examine what happens when the stock market booms in C
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