- Given A Close Economy Model Where Output Is Far Below Full Employment Determine The Effect Of A A Debt Financed Incr 1 (113.82 KiB) Viewed 15 times
Given a close economy model where output is far below full employment, determine the effect of: A.) a debt-financed increase in government spending, B.) reduction in CB discount rate, on the following indicators at different regions of the LM schedule. The following are your choices of answers. Write the letter corresponding to your choice. Choices: I- Increase D- Decrease R- Remains the same U - Uncertain A. A debt-financed increase in government spending B. Reduction in Central Bank discount rate Policy 5. At the 2. At the 3. At the Intermediate Classical Intermediate Region 6. At the Classical Region Region Region What will happen to each of the following Indicators? 1. investment 2. intere rate 3. tax revenue 4. money supply 5. consumption 6. income 1. At the Liquidity Trap 4. At the Liquidity Trap