- With the country in a recession, you are to draw up a plan on how to stimulate the economy. You are a Keynesian and you decide to use a stimulus check approach as the best way to prime the pump. The economy has slipped back from an equilibrium level of Real GDP of 7.5 trillion dollars to 6.5 trillion dollars. The equilibrium CPI is 165. If the MPC is 0.80 how much will government spending have to increase to bring the economy to full employment? Draw a graph from the "Neo Keynesian" perspective labeling all the curves and axes, clearly illustrating where the economy is and where it wants to be.

- With the country in a recession, you are to draw up a plan on how to stimulate the economy. You are a Keynesian and you decide to use a stimulus check approach as the best way to prime the pump. The economy has slipped back from an equilibrium level of Real GDP of 7.5 trillion dollars to 6.5 trillion dollars. The equilibrium CPI is 165. If the MPC is 0.80 how much will government spending have to increase to bring the economy to full employment? Draw a graph from the "Neo Keynesian" perspective labeling all the curves and axes, clearly illustrating where the economy is and where it wants to be.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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None
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