Question
Suppose that a government expansion of health care causes its spending to increase by $160 billion from $1,960 to $2,120. Compute the new amounts of
Suppose that a government expansion of health care causes its spending to increase by $160 billion from $1,960 to $2,120. Compute the new amounts of autonomous spending,_Ap,when the interest rate equals 0, 2, 4, and 6. (g)Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6 and graph the newIScurve. (h)Suppose that initially the interest rate equals 4 and the economy is in equilibrium at natural real GDP, which equals 10,900. If monetary poli- cymakers want to maintain income at natural real GDP, explain by how much they will change the interest rate as a result of either the Afghanistan troop reduction or the expanded health care.
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