Calculate the keynesian multiplier and short run equilibrium, Microeconomics

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?

 

Posted Date: 3/21/2013 4:03:08 AM | Location : United States







Related Discussions:- Calculate the keynesian multiplier and short run equilibrium, Assignment Help, Ask Question on Calculate the keynesian multiplier and short run equilibrium, Get Answer, Expert's Help, Calculate the keynesian multiplier and short run equilibrium Discussions

Write discussion on Calculate the keynesian multiplier and short run equilibrium
Your posts are moderated
Related Questions
Uses of Balance of payments account: It removes the uncertainty associated with the flexible exchange rate regime and brings stability. It also indirectly imposes some anti inf

The Money Multiplier is explained below: If you see carefully, the money multiplier is nothing but an inverse of a reserve ratio. Therefore, we can write MM = 1/rr, where rr is

What is main difference between nominal money supply and real money supply?  Real money supply is the supply of real money in the economy. Real money is supplied considering th

The price elasticity ( ε ) of demand for Q has been estimated at -0.5. Current consumption Q* is 70 units and market price (P*) is 0.70. a. Fit a linear demand curve to the obs

#quesUse a graphical illustration to describe briefly what the influence of each of the following would be on the market supply of labor:(a) an increase in immigration (b) more wom

Individual Demand * The Individual Demand Curve  - Two significant Properties of Demand Curves - 1) The level of utility which can be attained changes while moving along

What two developments are demanding new ways of looking at the economic world in the 21st century?  What kinds of sustainability questions do they raise? Two developments that

Demand Pull Inflation: It describes a sustained increase in the general price level that is caused by a permanent increase in nominal aggregate demand. Simply, is can be view

1. Why is a proprietary good necessary for a firm to choose to become a multinational? 2. In Ramondo, Rappoport, and Ruhl (2011), "Horizontal vs. Vertical FDI: Revisiting Evi

This method is also known as Experts opinion methods of investigation. In this method instead of depending upon the opinion of buyers and salesmen firms can obtain views of the spe