What two solutions did Keynes suggest as appropriate government policies in order to close a recessionary gap? ( For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).

Q: How much would the government have to change spending to close the gap?

A: There is multiplier effect occur in the economy so there is no need to send the same amount of…

Q: The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate…

A: Likewise to GDP, aggregate expenditure assesses the complete expenditure of a country at a given…

Q: Based on the articles “Unemployment Claims Remain Historically High” and “US Consumer Spending Rose…

A: Unemployment refers to a situation where a person is willing to work but he/she doesn't get…

Q: Suppose most business executives expect a slowdown in the economy.  How might this situation affect…

A: Since , slowdown in an economy simply means the decline in the rate of growth of the very economy…

Q: Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing…

A: Recession  When there is a general fall in economic activity, there is a recession, which is a…

Q: Please draw a AD-AS model as to how whether a tax that improves people’s health could have any…

A: A macroeconomic framework called the AD-AS model explains how the economy's price level and real…

Q: macroeconomic equilibrium is equal to potential GDP. Americans are becoming more cautious with their…

A: AD - AS Model  The AD-AS model clarifies how changes in government strategies, variances in…

Q: Assume you're given the following information about the economy of Jasonia; C = 500+ 0.9YD | 1000 T…

A: Y = C + I + G + (X-IM)      where, Y = GDP C = Consumption = 500+0.9YD where YD=Y-T I = Investment =…

Q: Use the following scenario for the next two questions. Suppose that the federal government decides…

A: The AD-AS framework, or Aggregate Demand-Aggregate Supply framework, is a model used in…

Q: Assume the following to answer the following questions:  C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports…

A: (a)(b) Since the current equilibrium output($7500) is less than the potential output($8000), there…

Q: From a spending model perspective, explain the causes of a recession

A: Recession refers to the situation where the growth rate of GDP is become negative between the two…

Q: What are variables that affect AD (also considered the Demand side of GDP)?

A: Aggregate Demand can be defined as total amount of goods and services that the consumers are able…

Q: Use the Keynesian cross to predict the impact on equilibrium GDP of equal-sized increases in both…

A: The gross domestic product refers to the total amount of all the goods and services produced in an…

Q: Keynesian

A: Keynesian Multiplier is an economic theory that asserts that an increase in private consumption…

Q: Some politicians have suggested tying the minimum wage to the consumer price index (CPI). Using the…

A: Minimum wage is the lowest wage that the worker must be paid to the worker as required by the law.…

Q: The following graph shows the new Keynesian aggregate supply (AS) curve for a hypothetical economy.…

A: The difference between the actual output of an economy and its potential output, which is the…

Q: How does the marginal propensity to consume (MPC) determine how GDP responds to policy changes? If…

A: The marginal propensity to consume (MPC) basically refers to the percentage of an additional dollar…

Q: In the classical model, what are the effects of an increase in government spending?

A: The objective of the question is to understand the impact of an increase in government spending in…

Q: What is the multiplier effect during a recession and full employment?

A: The multiplier effect describes how many times money poured into the economy multiplies itself to…