Calculate the keynesian multiplier and short run equilibrium, Microeconomics

Assignment Help:

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?

 


Related Discussions:- Calculate the keynesian multiplier and short run equilibrium

Economic growth, Economic Growth: Economic Growth refers to an increas...

Economic Growth: Economic Growth refers to an increase in real aggregate output (real GDP) reflected in increased real per capita income. A country is said to experience econo

Expected value, Expected Value - The weighted average of payoffs or val...

Expected Value - The weighted average of payoffs or values resulting from all the possible outcomes. The probabilities of every outcome are used as weights Expected

Structure of marginal cost, "Consider a market with n firms occupied in Ber...

"Consider a market with n firms occupied in Bertrand competition. These firms have in common dissimilar marginal costs but any number of them may also have equivalent marginal cost

Production Possibility Curve, Explain in detail the concept of PPC with sui...

Explain in detail the concept of PPC with suitable eg.

Homework, the difference between an lc3 and other types of businesses is th...

the difference between an lc3 and other types of businesses is that

Market price of pine sol, 1.  Clorox lowers the price of its GreenWorks TM ...

1.  Clorox lowers the price of its GreenWorks TM bathroom cleaner.  All other things remaining the same, choose how you think this will impact the market price of Pine-Sol. (Circl

Roger, What would be a factor that would make the prospects hopeful for ove...

What would be a factor that would make the prospects hopeful for overcoming the demand for resources in the future

Determine he combined production of fiber optic cable , Graph the following...

Graph the following example and answer the questions: The United States and Japan only produce two goods.  They have the same fixed resources and they are equally efficient, and bo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd