Government spending change by to get to real GDP potential

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Reference no: EM131101396

Presumably you have learned to diagnose the state of an economy and to explain how/why classical economists and Keynesians would deal with various problems in the macro economy. For this problem set I want you to go to the primary sources we’ve used in class and do this for the U.S. economy over the 3rd and 4th quarter of 2015. Follow this format: 2. Provide your data (quarterly and/or monthly, depending on what is available; don’t use annual data!) (You may find it useful to organize your data like I did in various chapter 9 worksheets). 3. State your diagnosis and explain how you arrived at it. 4. Tell what classical economists think our elected officials should do about this situation (and tell why they think this; be very specific). 5. Tell what Keynesians think our elected officials should do about this situation (and tell why they think this). 6. Look again at your data for the 4th quarter of 2015. Assume that the spending multiplier equals 1.5. How much should government spending change by to get to real GDP potential ? Should it increase or decrease spending? Show your work.

Reference no: EM131101396

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