Full employment output and consumption function

Reference no: EM1313686

The Situation: Full employment income is estimated to be $11,000. The current interest rate is estimated to be 4.178 recent. While last year total business investment spending was $900; the rising price of oil has caused expectations to deteriorate (see diagrammatic estimate). The year's federal budget is G=2000 and T=1000. The consumption function is estimated to be: C=500 + 0.75.YD. The Problem: Design and present, using narrative and equations, a fiscal policy sufficient to produce full employment and stable prices.

Reference no: EM1313686

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