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Assume the marginal propensity to consume = .8, and government purchases increase by $.2 Trillion. 1. Potentially, how much will real GDP increase in the short-run after the inc
In the long-run framework, budget surpluses: A. should be run on a permanent basis since they boost saving and investment and stimulate economic growth. B. should be run whenever o
Q. Determination of variables in AS-AD model? Once Y and P are determined, all other endogenous variables would be determined as well. Interest rate is determined by money mark
Q. Consumption function in the IS-LM model? The consumption function will be the same as in cross model, consumption will depend positively on Y. In the classical model, consum
which turning point marks the end of an economic prosperity and the start pf contraction
detail givn the transaction demand
Q. Show the example on multiplier effect? Emma makes a deposit: Emma has 1,000 in her mattress and decides to deposit it in K-bank. Deposit won't affect the money
Potatoes cost Janice $0.50 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50,
What are the Market interest rates The most important interest rates from a macroeconomic perspective are interest rates that the government pays on the loans they use to finan
Q. Important points about the classic model? The most important points about the classic model are as following: Monetary and fiscal policy can't affect the GDP or unem
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