Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q1 The economy Keynesia has the following expenditures, with the letters signifying the usual expenditure categories: $800 million + 0.3 y $900 million $1,400 million
Q1 The economy Keynesia has the following expenditures, with the letters signifying the usual expenditure categories: $800 million + 0.3 y $900 million $1,400 million $1 200 million $260 million a. Show that the equilibrium output for Keynesia is $12 billion. Draw an expenditure- output diagram (which is called a Keynesian Cross diagram) to illustrate the equilibrium. b. Suppose the rest of the world's purchases of Keynesia' s exports fall by $600 million. i. Show that the new equilibrium output is $8 billion. Illustrate your new equilibrium by adding to your Keynesian Cross diagram. ii. Describe qualitatively the process by which the economy moves to a new goods market equilibrium
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started