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

Capital intensive operations, Where minimum efficient scale is very huge fo...

Where minimum efficient scale is very huge for capital intensive operations, it may be more cost effective to allow one company to spread its fixed costs over a very huge number of

Labor productivity, Labor Productivity  - Labor Productivity and Standa...

Labor Productivity  - Labor Productivity and Standard of Living - Consumption can increase if productivity increases. - Determinants of Productivity Stock of capit

Explain the post-keynesian economics, Q. Explain the Post-Keynesian Economi...

Q. Explain the Post-Keynesian Economics? Post-Keynesian Economics: A modern heterodox school of economic thought that emphasizes more radical or non-neoclassical aspects of Joh

Mathematical representation-inflation unemployment trade-off, Mathematical ...

Mathematical representation - Inflation Unemployment Trade-off : Suppose that firms correctly perceive the state of demand in the economy and the rate of price inflation. The

Substitute product, If we have two products, A and B, which are substitutes...

If we have two products, A and B, which are substitutes, we can expect that a rise in the price of A (or B) will cause the demand for B (or A) to go up.” Examine this statement wit

MONOPSONY, ADVANTAGES AND DIS ADVANTAGES OF MONOPSONY

ADVANTAGES AND DIS ADVANTAGES OF MONOPSONY

Price mechanism, discuss the term of price mechanism,give examples to elabo...

discuss the term of price mechanism,give examples to elaborate the concept clearly

Financial economies, Financial Economies: These are benefits obtained...

Financial Economies: These are benefits obtained by large firms as a result of contracting credit from financial institutions at lower interest rates than smaller firms. The

Markets, Syndicated and organized oligopoly

Syndicated and organized oligopoly

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