Using the Expenditure Ap proach to GDP measurement show how you would think

Using the expenditure ap proach to gdp measurement

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Consider the following macroeconomic changes. Using the Expenditure Ap- proach to GDP measurement, show how you would think about each of the following. Explain how and why GDP is affected in the short run, and what you expect would happen to the IS curve. 1. The government offers a temporary tax credit whereby for each dollar of investment undertaken the firm receives a credit that reduces income taxes. 2. Brexit uncertainty leads to UK consumers demanding less Indian goods. 3. President Donald Trump imposes high trade tariffs on Indian produced goods. 4. The monsoon leads to excessive flooding which makes machines unusable for several months 5. There is a crash in the housing market that leads to house prices falling by 20% and new home sales drop sharply, but there is an uptick in the purchase of older homes. For each of the above discuss how policy makers might respond to the short-run fluctuations in GDP. Use economic arguments to justify your policy responses. 2
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