n a closed economy, suppose fiscal policy adds $500 bln in new government spending to GDP. Will the net effect on GDP be equal to, less than, or greater than $500? On what does your answer depend? In an open economy, is that same $500 bln rise in government spending going to have the same effect, all else equal, as in a closed economy? Why or why not?

n a closed economy, suppose fiscal policy adds $500 bln in new government spending to GDP. Will the net effect on GDP be equal to, less than, or greater than $500? On what does your answer depend? In an open economy, is that same $500 bln rise in government spending going to have the same effect, all else equal, as in a closed economy? Why or why not?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 4TY

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