Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who have low marginal propensities to consume, and Type B, who have high marginal propensities to consume. In Model 2, there are only Type B consumers. Then, an increase in the exogenous government purchases would lead to higher output in Model 1 than in Model 2. Answer True or False. Remember to include your explanation.

Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A, who have low marginal propensities to consume, and Type B, who have high marginal propensities to consume. In Model 2, there are only Type B consumers. Then, an increase in the exogenous government purchases would lead to higher output in Model 1 than in Model 2. Answer True or False. Remember to include your explanation.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter9: The Keynesian Model In Action

Section9.4: Recessionary And Inflationary Gaps

Problem 1YTE

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