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Application of Keynesian cross model diagram on Obama's fiscal stimulus package.

Using the Keynesian Cross model diagram below critically illustrate the short and long-term economic impact of Obama's stimulus package of $787 billion. Elucidate the impact will be in terms of major macroeconomic variables of the U.S. economy such as GDP growth, unemployment rate, and inflation.

382_Keynesian cross model.jpg

784_Keynesian cross model 2.jpg

Figure: In this case, the expenditure curve is too low to lead to full employment. Such a situation is currently the case. The economy, hampered by a slump in housing and a variety of financial problems, has slowed down considerably.

Legend

C = Consumer Expenditures

I = Investment

G = Government Purchases

(X - IM) = Net Exports

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922704

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