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Suppose that U.S. government actively uses the fiscal policy to fight against recession and rising unemployment. To incorporate this behavior of government into the model, let’s assume that the government spending equation is given by where 0.
Assume the reminder of the model is unchanged from the original setup.
a) Explain why the above equation could represent the active fiscal policy to fight against recession.
according to classical economists the aggregate supply curve isa.vertical in both the long run and the short runb.
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If I spent all my money ($450,000) on a new house I could buy a house with 4500 square feet. I settle for a 1500 square foot house. (Each square foot costs the same.) The day after I close the deal a nearby nuclear power plant is condemned and the va..
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