Describe the effects of contractionary fiscal policy by the domestic government on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model
What will be an ideal response?
Domestic country: output falls, real interest rate falls, and net exports rise
Foreign country: output falls, real interest rate falls, and net exports fall.
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The Nash equilibrium in a Bertrand game of price setting where all firms have different marginal cost is:
a. efficient because all mutually beneficial transactions will occur. b. efficient because of the free entry assumption. c. inefficient because some mutually beneficial transactions will be foregone. d. inefficient because of the uncertainties inherent in the game.
Which of the following is an example of cyclical unemployment?
a. A recent college graduate still looking for her first job b. A car salesman who loses his job because of a recession c. A ski instructor who is out of work during the summer d. An economics journalist who just quit her writing job in order to begin a new career as a college professor next month e. A worker displaced from his factory job because of greater mechanization in the workplace