What fiscal policy will be needed to put gdp on target next

Reference no: EM131139811

Life has become yet more complicated. Government spending works with a distributed lag. Now when $1 billion is spent today, GDP increases by $1 billion this period and $1.5 billion next period.

a. What happens to the path of GDP if government spending rises enough this period to put GDP back to its potential level this period?

b. Suppose fiscal policy actions are taken to put GDP at its potential level this period. What fiscal policy will be needed to put GDP on target next period?

c. Explain why the government has to be so active in keeping GDP on target in this case.

Reference no: EM131139811

Questions Cloud

Examine the financial ratios : Examine the financial ratios and indicate which firm is likely to be American Airlines, Intel, and Disney. Explain your reasoning.

How industrialization after civil war influenced us society : State your thesis on how industrialization after the Civil War influenced U.S. society, economy, and politics. Justify your response.

Examine at least two historical theories of emotion : Examine at least two historical theories of emotion and arousal as they relate to human motivation. Analyze at least two research methods used for uncovering basic emotions.

What is the corresponding depth range in the model : What is the corresponding depth range in the model and determine the required model sediment sizes

What fiscal policy will be needed to put gdp on target next : Life has become yet more complicated. Government spending works with a distributed lag. Now when $1 billion is spent today, GDP increases by $1 billion this period and $1.5 billion next period.

Evaluate the reliability and validity of your job analysis : Conduct a job analysis for your selected job using one of the job analysis methods and discuss how it could be used within an organization.Evaluate the reliability and validity of your job analysis.Evaluate different performance appraisal methods ..

What is the ratio of hydraulic time to sedimentation time : Determine the sediment discharge ratio and the sedimentation time ratio. What is the ratio of hydraulic time to sedimentation time?

What policy actions can be taken to put gdp back on target : You are told that the multiplier for government spending is 2 and that the effects of the increased government spending are immediate. What policy actions can be taken to put GDP back on target each period?

Explain the formation of stereotypes : According to the textbook, fundamental attribution error occurs when we focus less on the situation we are in and more on personal characteristics to describe behavior. Provide one (1) example of the primary manner in which situational and disposi..

User Account

All Pages