Econ 100C: Problem Set 4 Due Mon. or Tues. 5/4-5 (note earlier due date!) 1. (Mankiw, Chap. 11, Problem 1): Use the Keynesian cross to predict the impact on equilibrium GDP of the following. In each case, state the direction of the change and give a formula for the size of the impact. a) An increase in government purchases.
b) An increase in taxes.