Business, 15.04.2021 18:20 timiaparker

8. Use analysis the Classical model to explain the impact of a fiscal policy in the long run. More specifically, suppose that the government approves a package to help the economy by increasing government spending in 1 trillion dollars. Assume that the economy starts from equilibrium: a) What are the effects of this policy in the long run on savings, investment, consumption, real output, real interest rates, investment, savings, and consumption? b) Show it graphically using the market for loanable funds (Hint: r in the Y-axis and I, S in the X-axis)

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8. Use analysis the Classical model to explain the impact of a fiscal policy in the long run. More s...

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