A) On a graph, use the traditional IS-LM model to analyze how the economy would respond in the short-run and the long-ru
Posted: Sun Jul 03, 2022 3:43 pm
A) On a graph, use the traditional IS-LM model to analyze how the economy would respond in the short-run and the long-run in response to the increase in government spending. What happens in the short-run and the long-run to output, the real interest rate and the aggregate price level?
B) On a graph, re-analyze the short-run and long-run response of the economy using classical assumptions. Explain why the classical theory of expansionary fiscal policy differs from the traditional theory in part A.
B) On a graph, re-analyze the short-run and long-run response of the economy using classical assumptions. Explain why the classical theory of expansionary fiscal policy differs from the traditional theory in part A.