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Thought_problems_for_Prelim_II - If Md become insensitive...

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Thought problems for Prelim II Suppose you know the following model Y = C + I + G C = C(Y, T; MPC) I = I(r) G and T are determined by policy Md = Md(Y, r) Ms is determined by policy Explain what happens to the spending multiplier and the reasoning. If C becomes more sensitive to MPC IF C becomes more sensitive to changes in T
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Unformatted text preview: If Md become insensitive to changes in Y If I becomes insensitive to changes in r If Md becomes more sensitive to changes in r Explain the model written as follows: especially the meaning of T = T(Y) S(Y, T; MPS) + T(Y) = I(r) + G...
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