Question
Suppose that potential GDP is $7.8 trillion and the equilibrium real GDP is $7 trillion. If the Keynesian spending multiplier is 2, what is the
Suppose that potential GDP is $7.8 trillion and the equilibrium real GDP is $7 trillion. If the Keynesian spending multiplier is 2, what is the level of fiscal stimulus (government spending) required to move the economy back to potential GDP? Show your work and explain.
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Macroeconomics
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
1st Edition
978-0132109994, 0132109999
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