Principles of Macroeconomics
7th Edition
ISBN: 9781260110982
Author: Frank, Robert
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 13, Problem 1RQ
To determine
The key assumption of basic Keynesian model and its impact on short-run economic fluctuations.
Expert Solution & Answer
Explanation of Solution
The key assumption of the basic Keynesian model or the Keynesian cross is that ‘in the short run, firms meet the
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Without Trade
Production
Consumption
With Trade
Production
Everglades
Denali
Shorts
(Millions of
Almonds
Shorts
Almonds
pairs)
(Millions of
pounds)
(Millions of
pairs)
(Millions of
pounds)
12
16
5
30
12
16
5
30
64
0
0
20
Trade action
Imports 13 ▼
Exports 39▾
Imports 13 ▼ Exports 39
Consumption
Gains from Trade
Increase in
Consumption
Chapter 13 Solutions
Principles of Macroeconomics
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