Economics In the small country of Lavinia; the GDP which means aggreagate supply is $ 120 billion, the MPS is 0.25, investment is $ 10 billion, and G is $ 10 billion. a) Is there an equilibrium in that economy? b) If there is a gap between agg. Supply and agg. Demand (e.g if AS> AD); what is the required increase in G if the Keynesian multiplier analysis is correct.

Economics In the small country of Lavinia; the GDP which means aggreagate supply is $ 120 billion, the MPS is 0.25, investment is $ 10 billion, and G is $ 10 billion. a) Is there an equilibrium in that economy? b) If there is a gap between agg. Supply and agg. Demand (e.g if AS> AD); what is the required increase in G if the Keynesian multiplier analysis is correct.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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