1) according Keynesian’s theory (the government could switch role and become con
ID: 1196476 • Letter: 1
Question
1) according Keynesian’s theory (the government could switch role and become consumers during a recession) Discuses these theory with some example. !?
2) what is the employment rate if the number population (9 million in 2012) and (11 million in 2013) and (12 million in 2014) when the number of labor force was (in 2012 - 4 million) (in 2013 -5 million) and (2014 - 6 million)?
3) What is the condition of macroeconomics equilibrium and find MPC when Y=1 and MPS=0.25. ?
could you just help me with this three questions please its from my assignment and very important, thanks aloot
Explanation / Answer
Ans 1 - In a recession, when individuals stop spending and investing, and the government's tax revenues therefore decline, the government must also slam on the brakes. This completely overlooks the responsibility of governments during a recession to lean against the logic of the market. As Keynes saw, a government that behaves in a recession as everyone else behaves will simply make the recession worse.
Ans 2 - Employment rate
2012 = 4 / 9 = 44.44%
2013 = 5 / 11 = 45.45%
2014 = 6 / 12 = 50%
Ans 3 - MPC = 1 - MPS = 0.75
Condition of macroeconomics equilibrium = spending multiplier = Y / MPC = 1 / 0.75 = 1.33, which means that a $1 increase in the expenditure will increase the GDP by $1.33.
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