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1. Use the following figure below to answer to following problem

349_intrest rate.jpg

From figure, indicate by using numbers where the economy is situated if the interest rate is below the equilibrium level and people are holding less money than they want.

2. Imagine that the economy starts at equilibrium and the MPC = 0.75. What would be the consequence of a $300 raise in government spending once all the rounds of multiplier process are complete?

3. Imagine that the economy starts at equilibrium and the MPC = 0.8. What would be the consequence of the 300 raise in taxes once all the rounds of multiplier process are complete?

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M910519

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