Question
With a severe pandemic in the country, the government of Crytonia decide to add a stimulus check to everyone.This increase in government expenditures increases the
With a severe pandemic in the country, the government of Crytonia decide to add a stimulus check to everyone.This increase in government expenditures increases the budget deficit by a significant amount.Using the long run model of the economy (Chapter 3) graphically illustrate how this stimulus package will impact the economy.Be sure to label the axes, the curves, the initial equilibrium values, the direction curves shift, and the terminal equilibrium values.State in words and explain what happens to (i) the real interest rate; (ii) national saving; (iii) investment; (iv) consumption; and (v) output.
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