The government of an economy has increased its spending and its taxes by the same amount. i) What is the effect on investment? Use loanable funds market framework to illustrate your answer graphically and explain in words. ii) Does higher marginal propensity to consume amplify this effect or not? Explain your answer analytically. 2nd time submitting as a post, please answer this problem fully and explain work. Please answer graphically and use words as prescribed Please explain results fully. Use graph please as well. The first time I submitted this I was given a partial answer that I believe to be inaccurate for merely half the problem and that used no graph. Macmillan macroeconomics textbook is a good reference.
5.
The government of an economy has increased its spending and its taxes by the same amount.
i) What is the effect on investment? Use loanable funds market framework to illustrate your answer graphically and explain in words.
ii) Does higher marginal propensity to consume amplify this effect or not? Explain your answer analytically. 2nd time submitting as a post, please answer this problem fully and explain work. Please answer graphically and use words as prescribed
Please explain results fully. Use graph please as well. The first time I submitted this I was given a partial answer that I believe to be inaccurate for merely half the problem and that used no graph.
Macmillan
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