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
1.  How does the marginal social benefit curve of a common resource compare to the marginal social benefit curve of positive externality from a mixed good? Highlight the difference

how do you find the average fixed costs using total fixed costs and total product?

Why has it been difficult to produce a single estimate of an environmentally adjusted or "greened" GDP? What are the two approaches that can be used to put a value on environmental

Illustrates the key terms of excise tax? Terms of excise tax: a. Tax incidence • Who bears the load of the tax? b. Excess burden or Deadweight loss • Taxes inflict

Where minimum efficient scale is very huge for capital intensive operations, it may be more cost effective to allow one company to spread its fixed costs over a very huge number of

How a manager determines the optimal number of employees in a project

Price Elasticity of Demand is explained below: Price elasticity of demand/require is the percentage change in the quantity demanded with respect to the percentage change in the

equation for a demand curve is p=2/q. what is the elasticity of demand if price falls from 5 to 4

if the inverse demand curve is p=120-Qand the marginal cost is constant at 10, how does charging the monopoly a specific tax of 10 per unit affect the monopoly optimum and the welf

two countries workland and playland have similar population and identical production possibilities curves but diffrefences . the procuction possibilities combination are as follows