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.
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.
C = Consumer Expenditures
I = Investment
G = Government Purchases
(X - IM) = Net Exports