What happens to equilibrium output in the goods market

Reference no: EM132315824

Question: 1. Suppose the government increases its expenditures with no change in taxes. Use the Keynesian cross diagram (the ZZ-Y diagram) to illustrate graphically and explain verbally what happens to equilibrium output in the goods market.

2. Now use the ISLM model to illustrate graphically and explain verbally what happens to equilibrium income, the interest rate, and investment. Clearly explain the effects on investment.

3. What would happen to equilibrium output if the increase in government expenditures was matched by an equal increase in taxes (like under a balanced budget rule)? No need to draw any graph for this part; just explain verbally.

Reference no: EM132315824

Questions Cloud

Payment time case study : Payment Time Case Study. Compute the 99% confidence interval. Using the 99% confidence interval, can we be 99% confident that µ = 19.5 days?

Examine starbucks compensation challenges : Examine STARBUCKS compensation challenges and industry competition. Develop an incentive plan suitable for all participating members that encourages.

Evaluate goals and priorities of the local government goods : Evaluate goals and priorities of the local government goods and services. Assess internal and external challenges for providing goods and services.

Make a short analysis of Dell strategic potential : Make a short analysis of Dell's strategic potential. Make a short description of the situation of AIMCO (case) and your forecast of development

What happens to equilibrium output in the goods market : Suppose the government increases its expenditures with no change in taxes. Use the Keynesian cross diagram (the ZZ-Y diagram) to illustrate graphically.

Why do some countries grow faster than others : Why is the hypothesized trade-off between unemployment and inflation important for policy makers? Why do some countries grow faster than others?

What are the causes and effects of terrorism : Topic - What are the causes and effects of terrorism. Use APA formatting style

Research a professional or trade organization : Professional or trade organizations can provide ethical guidelines for business professionals within their selected organization. Research a professional.

Analyse the data using statistical and machine learning : a prediction algorithm for predicting how much money each customer is likely to spend in a year - a classification algorithm for predicting which customers

User Account

All Pages