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Given the full employment output also consumption function, using equations design a fiscal policy to prodcue full employment output.

The Situation: Full employment income is estimated to be $11,000. The present 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: Design and present, using narrative and equations, a fiscal policy sufficient to produce full employment and stable prices.

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M920421

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