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Using Keynesian Cross diagram, illustarte the effects of fiscal policy & transition to full employment output.

The Situation: Full employment income is estimated to be $11,000. The current interest rate is estimated to be 4.178 [irrcent. While last year total business investment spending was $900; the rising price of oil has caused expectations to deteriorate (see diagrammatic estimate). The year's federal budget is G=2000 and T=1000. The consumption function is estimated to be: C=500 + 0.75.YD. The Problem: Illustrating Full-Employment

Use the cross-diagram to illustrate the effects of your fiscal policy. Be sure to discuss the comparative static's of the impact and the transition to full employment. Be sure to provide a written narrative of the process.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M920423

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