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(Solved): 5. Return to the case considered in question 2, where investment is completely interest inelastic ...
5. Return to the case considered in question 2, where investment is completely interest inelastic and the IS schedule is vertical. Analyze the effects of an increase in government spending in this case within the variable price-fixed wage version of the Keynesian model. Compare the effects with those in the fixed price version of the model.
Expert Answer
aggregate demand is disbursal by federal, state, and native governments. though the u. s. is typically thought of as a free enterprise, government still plays a big role within the economy. Government provides vital public services like national defe