09-03-2009 113808 PM

09-03-2009 113808 PM - interest rate, the amount of...

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III. Consider an economy in the long run with real GDP equal to the level of potential output, Y . a. Draw the diagram of the market for loanable funds, and derive the national saving equation. .as- AK'-Cf-C -7>K7--O b. Suppose the government pursued a fiscal expansion by increasing the level of government purchases. Explain what would happen to the equilibrium
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Unformatted text preview: interest rate, the amount of investment in the economy, and the long-run growth rate. yi/s f 0.1 Ji V; ' c. Now suppose the fiscal expansion occurs by reducing taxes. Explain what effect this would have on the interest rate, investment, and long-run growth rate. 10...
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This note was uploaded on 01/15/2012 for the course ECON 104 taught by Professor Peter during the Summer '09 term at Camosun College.

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