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The government notices that there is an output gap and decides to increase government spending with a stimulus package of $4 trillion in hopes that it will spur growth and stop unemployment.
1. What is the new level of GDP (as determined by aggregate expenditure)?
2 Calculate the Keynesian Multiplier.
The price level now adjusts to get us to a new short-run equilibrium.
3 What is the new short-run equilibrium (price level and GDP)?
4 What is the new output gap?
5 Assume that the government is done spending (as is other autonomous expenditure items). What must change to get us to long-run equilibrium?
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study on internet will impact on gdp
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Suppose taht two people, Michell andJames each live alone in an isolated region. They each have the same resources available, and they grow potatoes and raise chickens. If Michelle
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The government has undertaken a highway bridge project that was originally projected to cost $2 million and provide benefits of $2.5 million. Unfortunately, the costs have been mu
Question 1: (a) Using examples, explain how the theory of Purchasing Power Parity conforms to the Law of One Price. (b) According to you, how best does the Theory of Purchasing
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