Suppose now there is an increase in government spending. In which case (flat/steep) is the multiplier effect on income higher, and most importantly, why?
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- the main point is in this case , which flat is curve or steep IS CURVE will be more effective ?
- Apr 03, 2018 at 8:40am
- The steep IS curve will be more effective,this is because,the increase in government spending will lead to increase in aggregate demand which further causes the IS curve to shift upward and this makes the IS curve more steep
- Apr 03, 2018 at 8:55am
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Government spending is a type of expenditure made by government and increase in government spending means expenditure of... View the full answer
An increase in government spending will lead to increase in multiplier. The government spending multiplier indicates how much... View the full answer