Question: Suppose that consumption in Canada is given by = 0 + 0.2. The Canadian government increases spending by $1 billion to support hospitals and research.
Suppose that consumption in Canada is given by = 0 + 0.2. The Canadian government increases spending by $1 billion to support hospitals and research. b) How does the additional spending affect Canadian GDP in the short run? c) Illustrate the effects of the $1 billion expenditure on the goods market equilibrium. d) If the same spending is made before the pandemic, will the GDP in Canada increase by more or less than the amount in b)? Please explain the intuition.
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