Problem_Set_3_Wilson, Lisa

Theory a conversion such as this will lower interest

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theory, a conversion such as this will lower interest rates, depreciate the dollar, reduce real GDP, and be less disinflationary than usual due to the falling value of the dollar. Government spending increases and large budget deficits of 2008-2011 did strengthen aggregate demand. It is too soon to tell, however, early signs point to the Keynesian point of view being correct. 3. What is the current rate of unemployment? How rapidly has GDP grown during the past 3 years? What do these figures indicate about the validity of the Keynesian view? The current rate of unemployment is 7.6%, as of March 2013. (Bureau of Labor Statistics, 2013). After falling 2.2% in 2009, the GDP has grown during the last three years as follows: 3.8% in 2010, 4% in 2011, and 4% in 2012 (Bureau of Economic Analysis, 2013). These figures certainly confirm the Keynesian view, that during a recession increased government spending will aid in the recovery effort. This clearly was not just a temporary fix as the critics would suggest.
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Lisa A. Wilson ECON 214 D05 201320 Liberty University 4.
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