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Explain the effect of an increase in imports (= an increase in marginal propensity to import) on the equilibrium GDP in the Keynesian income-expenditure model.
- Explain the effect of an increase in imports (= an increase in marginal propensity to import) on the equilibrium GDP in the Keynesian income-expenditure model. Show the new equilibrium and explain the adjustment to the new equilibrium.
- Carefully explain the effect of a $100 decrease in government transfers (subsidies for education, pensions etc.) on the equilibrium GDP in the Keynesian income- expenditure model. Show the new equilibrium and explain the adjustment to the new equilibrium.
- Suppose the Central bank of a country issues additional money as cash (additional $100).
a) What will be the total change in money supply if all $100 are held as cash?
b) What will be the total change in money supply if all $100 are deposited in a commercial bank?
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Precalculus
Authors: Jay Abramson
1st Edition
1938168348, 978-1938168345
