Persistent rumors about new vaccine-resistant coronavirus variants leads to (i) a long- term decrease in business confidence, and to a decline in Investment spending. At the same time, (ii) the government commits to a large permanent increase in spending for pandemic preparedness. According to the Spending Allocation Model, the combined effect of (i) and (i) will be: (Hint: drawa graph) O Equilibrium R will rise. Equilibrlum I/Y could rise or fall. O Equilibrium R could rise or fall. Equilibrium I/y" will fall. O Equilibrium R' could rise or fall, EquilibriumI/Y could rise or fall, O Equilibrium R will fall. Equilibrium 1/Y will rise.

Persistent rumors about new vaccine-resistant coronavirus variants leads to (i) a long- term decrease in business confidence, and to a decline in Investment spending. At the same time, (ii) the government commits to a large permanent increase in spending for pandemic preparedness. According to the Spending Allocation Model, the combined effect of (i) and (i) will be: (Hint: drawa graph) O Equilibrium R will rise. Equilibrlum I/Y could rise or fall. O Equilibrium R could rise or fall. Equilibrium I/y" will fall. O Equilibrium R' could rise or fall, EquilibriumI/Y could rise or fall, O Equilibrium R will fall. Equilibrium 1/Y will rise.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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