The government spent $10,000 to buy new computers from IBM. If MPC = 0.8 and there...

  

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The government spent $10,000 to buy new computers from IBM. If MPC = 0.8 and there is no crowding out, how is AD curve affected? Suppose that the natural rate of unemployment is 5%, the expected inflation is 4%. Also, to decrease unemployment rate by 1% the inflation increases by 2% in the short-run. .Write down the equations for the short-run and long-run Phillips curves. # of employed # of unemployed not in labor force 120 million 5 million. 9 million The government spent $10,000 to buy new computers from IBM. If MPC = 0.8 and there is no crowding out, how is AD curve affected? Suppose that the natural rate of unemployment is 5%, the expected inflation is 4%. Also, to decrease unemployment rate by 1% the inflation increases by 2% in the short-run. .Write down the equations for the short-run and long-run Phillips curves. # of employed # of unemployed not in labor force 120 million 5 million. 9 million

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To understand how the AD aggregate demand curve is affected by the given scenario we need to consider the multiplier effect of government spending The ... View the full answer