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


What is the difference between GDP and GNP?  Gross domestic product (GDP) is the value of the total final output formed inside a country, during a given year. GDP, like all mea


Question : (a) Suppose Firm A is a perfectly competitive firm producing good X and faces the following average revenue and average cost Average Revenue: P = 10 Average Co


In a small rural town, 150 people would like to be employed (this is the supply of labor). In order to make profits, capitalists hire some of these workers to produce grain. Those

if a monopolist makes economic profits, new firms enter the market and compete with the monopolist in the long run.

Financial relationship with the IMF: IMF provides temporary assistance to member countries to tide over BOP deficits. When a country requires foreign exchange, its tenders its

What is a negative externality?