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The following information applies to questions 1 - 4. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian
The following information applies to questions 1 - 4. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.9 YD I = 240 G = 240 = 400 + 0.9 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes. 1. What can you say about the government's budget situation? (Hint: Think about what "G" and "T" stand for.)
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