Assume there is an increase in government spending of 20 million and no change in taxes. Answer

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Assume there is an increase in government spending of 20 million and no change in taxes. Answer the following and demonstrate your answers using a diagram. (Note: make sure you label everything in the graph correctly, and link it to your written explanations)

a. What effect will this have on the demand and supply of loanable funds? How will this affect the real interest rate and the quantity of investment?

b. Is the change in equilibrium investment the same, more, or less than the initial change in government spending? Why?

Related Book For answer-question

Macroeconomics

ISBN: 978-0138014919

12th edition

Authors: Robert J Gordon

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Posted Date: Jan 18, 2021 02:03 PM

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Assume there is an increase in government spending of 20 million and no change in taxes. Answer

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In the mortgage market an equitable interest rate is determined when the lending of the loan Savings ... View the full answer

Macroeconomics

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