Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Related to the first question Prin Lab 6 (Que 2) -Lyngale x Q laecon1.lyryx.com orviets/LabServier7ceid -3824 b) Find the value of the goods market multiplier

Related to the first question

image text in transcribed Prin Lab 6 (Que 2) -Lyngale x Q laecon1.lyryx.com orviets/LabServier7ceid -3824 b) Find the value of the goods market multiplier Pause Goods market multiplier = 0 c) Let G rise to 390. Solve for the new equilibrium Y and C. Y =O d) Demonstrate how the increase in G affects the economy through the multiplier, Use three rounds of effects to demonstrate the multiplier effects. Let the first round be related to health care the second round related to clothing, and the third round related to food. Round 1 -> As the government wants to spend $1 (or $1 billion) on health care, it demands the production of health care equipment such as hospitals, medicine, equipment, etc, to be built and sold to the government. So as AG = 1, the production AY = 0 , This Y is the income to the nurses, doctors, construction workers, etc. Round 2 ->As the nurses receive their new income of Y = 0 , they spend 0 % of this $ 0 on clothing - 0 cents worth of clothing would be produced, or AY = 0 > this 0 cents would be the income of the workers involved in making the clothing. Round 3 > As the clothing workers receive their new income of Y = 0 . they spend 0 %% of this 0 cents on food -> ( 0 )( 0 ) = 0 or 0 cents worth of food would be produced, or AY = 0 > this would be the new income to the food workers. e) Now consider monetary policies only. Suppose the BOC wants to drop the / to 0.05 or 5%, with G still at $290. Solve for the new I and the Al compared to when i = 0.10. Given the multiplier, much would you expect Y to rise by? = 0 Change in 1 = 0 Change in Y = 0 M. the consumption expenditure C, and the investment expenditure I. n Given the changes in (e MacBook Air

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Development And The Washington Consensus A Pluralist Perspective

Authors: John Marangos

1st Edition

042953485X, 9780429534850

More Books

Students also viewed these Economics questions