A government announces a green budget where they will provide zero interest loans for private sector investment in green electricity production, spend on government investment in rail transport and increase value added tax on all consumer goods with a high carbon footprint. Use the multiplier model (diagram and equations) to explain the likely effect on aggregate demand in the economy. Assume ceteris paribus. In your answer explain how you are interpreting ‘cet. par.’ when discussing the predictions of the multiplier model.
A government announces a green budget where they will provide zero interest loans for private sector investment in green electricity production, spend on government investment in rail transport and increase value added tax on all consumer goods with a high carbon footprint. Use the multiplier model (diagram and equations) to explain the likely effect on aggregate demand in the economy. Assume ceteris paribus. In your answer explain how you are interpreting ‘cet. par.’ when discussing the predictions of the multiplier model.
Chapter18: The Keynesian Model
Section: Chapter Questions
Problem 9SQP
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) A government announces a green budget where they will provide zero interest loans for private sector investment in green electricity production, spend on government investment in rail transport and increase value added tax on all consumer goods with a high carbon footprint. Use the multiplier model (diagram and equations) to explain the likely effect on aggregate demand in the economy. Assume ceteris paribus. In your answer explain how you are interpreting ‘cet. par.’ when discussing the predictions of the multiplier model.
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