5 (Part C) You are told that 90 cents out of every extra dollar pumped into...

 

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5 (Part C) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $8 billion. (15 points) (Points: 40) R Spellchecker a. The economic terminology of demand-side economics is synonymous to Keynesian economics. Keynesian economists believe the economy is best controlled by manipulating the demand for goods and services, although, these economists do not completely disregard the role the money supply has in the economy and on affecting gross domestic product, or GDP. They do, however, believe it takes a great amount of time for the economic market to adjust to any monetary influence. Keynesian economists believe in consumption, government t expenditures and net exports to change the state of the economy. Monetarists are certain the money supply is what controls the economy. They believe that controlling the supply of money directly influences inflation. Additionally, monetarists believe that by fighting inflation with the supply of money, they can influence interest rates in the future. Imagine adding more money to the current economy and the effects it would have on business expectations and the production of goods. Now imagine taking money away from the economy. What happens to supply and demand? FS 9 F7 & 7 E F8 U 4 8 F10 61 0 ) 0 F12 Prtic Pam Wome Lock 10:17 PM 2/04/2017 5 (Part C) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $8 billion. (15 points) (Points: 40) R Spellchecker a. The economic terminology of demand-side economics is synonymous to Keynesian economics. Keynesian economists believe the economy is best controlled by manipulating the demand for goods and services, although, these economists do not completely disregard the role the money supply has in the economy and on affecting gross domestic product, or GDP. They do, however, believe it takes a great amount of time for the economic market to adjust to any monetary influence. Keynesian economists believe in consumption, government t expenditures and net exports to change the state of the economy. Monetarists are certain the money supply is what controls the economy. They believe that controlling the supply of money directly influences inflation. Additionally, monetarists believe that by fighting inflation with the supply of money, they can influence interest rates in the future. Imagine adding more money to the current economy and the effects it would have on business expectations and the production of goods. Now imagine taking money away from the economy. What happens to supply and demand? FS 9 F7 & 7 E F8 U 4 8 F10 61 0 ) 0 F12 Prtic Pam Wome Lock 10:17 PM 2/04/2017

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Calculation of Change in GDP GDP Gross domestic product Go... View the full answer