After the increase in total factor productivity the government decides to increase expenditures, G. Suppose the government
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Question:
After the increase in total factor productivity the government decides to increase expenditures, G. Suppose the government increases G so that the representative consumer is just as well off (has the same level of utility) as before the change in total factor productivity. After the change in G and the increase in z, how does the level of consumption, employment, the real wage, and output compare to the levels before the increase in total factor productivity? [Needs Visuals]
I am confused on how to see the levels of consumption before and after the increase in G?
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