Question
For the macroeconomics under the model of uncertainty and expectation, we have expected productivity which depends on the signal and probability of different productivity. Example
For the macroeconomics under the model of uncertainty and expectation, we have expected productivity which depends on the signal and probability of different productivity. Example like s = {good, bad} and z = {zl, zh} with prob(good, zh)=0.8 prob(good, zl)= 0.2 prob(bad, zh)=0.4 prob(bad,zl)=0.6
and our expected productivity is ze(zh)=0.8*zh+0.2zl or ze(zl)=0.4*zh+0.6zl and both option zh or zl has a fixed cost from government G
I want to ask, under the same model, if the productivity fixed prob doesn't change but the government spending varies(G) could I applied the same process to calculate expected government spending?
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