6. Suppose real GDP in an economy equals its potential output of $2,000 billion, the multiplier is 2.5, investment is raised by $200 billion, and the increased investment does not affect the economy's potential. a. Show the short- and long-run effects of the change upon real GDP and the price level, using
6. Suppose real GDP in an economy equals its potential output of $2,000 billion, the multiplier is 2.5, investment is raised by $200 billion, and the increased investment does not affect the economy's potential. a. Show the short- and long-run effects of the change upon real GDP and the price level, using
Chapter11: Fiscal Policy
Section: Chapter Questions
Problem 1.4P
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