Why did Orthodox Keynesians believe that fiscal policy is more powerful than monetary policy? Briefly explain your answers by using a closed economy IS-LM model. [Also refer to the relevant parameters of the model I.e l=T-bi and L=Ky-hi). Please talk about 1. Investment l=T-bi I.e what orthodox Keynesian says about parameter b. use diagram IS LM 2. Money demand L=Ky-hi I.e what orthodox Keynesian says about parameter (h). use also diagram Thank you

Why did Orthodox Keynesians believe that fiscal policy is more powerful than monetary policy? Briefly explain your answers by using a closed economy IS-LM model. [Also refer to the relevant parameters of the model I.e l=T-bi and L=Ky-hi). Please talk about 1. Investment l=T-bi I.e what orthodox Keynesian says about parameter b. use diagram IS LM 2. Money demand L=Ky-hi I.e what orthodox Keynesian says about parameter (h). use also diagram Thank you

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the following information about an economy, answer the questions below: • C = 55 +0.7YD • /0 = 300 • Go = 280 ● NT 0.2Y 1 Use the multiplier to solve for Y*, and draw an AE-Y graph. Draw a BB graph for the economy. After solving for BB, show where the country's equilibrium Y would land on this graph. 2 - 3 Suppose the economy encountered a recessionary gap. Provide one way the government could use fiscal policy to close this gap and demonstrate this change on both above graphs.
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Explanation it correctly Q)Explain on a table the differences between the two macroeconomic multipliers (fiscal policy, monetary policy) studied in the second part of the course.
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