Answered: Assuming that the monetary authorities…

Assuming that the monetary authorities hold the money supply constant, explain why the decrease in government spending reduces output more in the Keynesian-cross model than in the IS-LM model.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 1WNG

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Assuming that the monetary authorities hold the money supply constant, explain why
the decrease in government spending reduces output more in the Keynesian-cross
model than in the IS-LM model.

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