Use the Keynesian cross 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
Use the Keynesian cross 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
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section: Chapter Questions
Problem 7TY
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Use the Keynesian cross 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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