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Using the same simple macro model we developed in Module 2:
a. Show what will happen to national income (GDP) if the administration implements another $100 (billion) stimulus spending package.
b. Show what would happen if instead of a government spending package, the administration implemented a $100 tax cut.
c. From your results, find the numerical values of the derivatives dY/dG and dY/dT. (Hint: Numerically, dY is just the new value of Y less the old value and dG is the new value of government spending less the old one. Find the ratios of those numbers and you have found the value of the derivative.) Which policy has the largest effect and why?
Neo Classical vs Keynesian School We know that Keynesian economics was propounded as a revolution against the then prevailing orthodoxy of the classical school. In time,
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Given a saving function of S = -25 + .2Yd, a $10 billion enhance in government spending will bring about how many dollars of change in consumption?
How does economic theory contribute to managerial decisions?
Determine the Theory of Exchange and Price Theory Theory of Exchange is commonly called Price Theory. Price determination under various types of market conditions comes under
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Suppose that Betsy's utility function is given by the equation U=Y0.3 where Y is calculated in thousands of dollars. Betsy's present job pays her $20,000 (Y=20) per year and she ca
a) The following would most likely shift a production possibilities curve to the right? b) Money should not be considered an economic resource ? c) Which of the following is
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