Question
Can you please give me a brief answer for the following question?? Assume that in the economy where Angela lives, the majority of the population
Can you please give me a brief answer for the following question??
Assume that in the economy where Angela lives, the majority of the population has been vaccinated and the economy is recovering. You are presented with the following information.
i) Homebuilding companies are reporting the best conditions in more than three decades.
ii) Households are withdrawing equity from their houses and mortgages are very cheap
iii) In aggregate, households have increased their deposits at banks since the pandemic began and household debt service ratios are historically low
iv) In aggregate, businesses have twice as much accumulated cash as they have had for many decades
Explain how you would incorporate these facts about households and firms into the multiplier model. Use a diagram to illustrate.
Comment on what the multiplier model predicts.
How would information about the way the pandemic affected inequality amongst households affect your analysis of what the multiplier model predicts?
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