Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
8th Edition
ISBN: 9781337368087
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 24, Problem 8PA
To determine
Increase in government spending.
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An economy is operating with output that is $40 billion below its natural level, and fiscal policymakers
want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest
rate constant, so there is no crowding out. The marginal propensity to consume is 4/5, and the price level
is completely fixed in the short run. In what direction and by how much would government spending
need to change to close the recessionary gap? Explain your thinking
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An economy is operating with output that is $40 billion below its natural level. And fiscal policy makers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant so there is no crowding out. the marginal propensity to consume 4/5 and the price level is completely fixed in the short run. In what direction and by how much would government spending need to change to close the recessionary gap? Explain.
An economy is operating with output that is $400 billion below its natural level, and fiscal policymakers want to close this recessionary gap.The central bank agrees to adjust the money supply to hold the interest rate constant, so there is not crowding out. The marginal propensity to consume is4⁄5′ and the price level is completely fixed in the short-run .In what direction and by how much would government spending need to change to close the recessionary gap? Explain your thinking.
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Bundle: Essentials Of Economics, Loose-leaf Version, 8th + Lms Integrated Mindtap Economics, 1 Term (6 Months) Printed Access Card
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