Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian model change? How does that shift the expenditure schedule? What happens to output as a result?) (a) Business confidence increases (b) The stock market declines (c) Credit market conditions become easier (d) The US dollar depreciates relative to the Euro (e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show how this affects the US economy)
Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian model change? How does that shift the expenditure schedule? What happens to output as a result?) (a) Business confidence increases (b) The stock market declines (c) Credit market conditions become easier (d) The US dollar depreciates relative to the Euro (e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show how this affects the US economy)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter26: The Neoclassical Perspective
Section: Chapter Questions
Problem 9RQ: A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals...
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![2. Practice with the Keynesian model-graphs
Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian
model change? How does that shift the expenditure schedule? What happens to output as a result?)
(a) Business confidence increases
(b) The stock market declines
(c) Credit market conditions become easier
(d) The US dollar depreciates relative to the Euro
(e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show
how this affects the US economy)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F59432203-a23c-4d88-8f63-1cdb9dc5d975%2Fc33bb69b-6533-448b-b7b9-5e85638c990e%2Fisi483j_processed.png&w=3840&q=75)
Transcribed Image Text:2. Practice with the Keynesian model-graphs
Show using a graph how the following shocks would affect equilibrium output. (Which parameters in the Keynesian
model change? How does that shift the expenditure schedule? What happens to output as a result?)
(a) Business confidence increases
(b) The stock market declines
(c) Credit market conditions become easier
(d) The US dollar depreciates relative to the Euro
(e) The stock market booms in Canada (Hint: use one picture to show what happens to Canada, then another to show
how this affects the US economy)
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VIEWStep 2: Examine what happens when business confidence increase
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VIEWStep 4: Examine what happens when credit becomes more accesible
VIEWStep 5: Examine what happens when the home dollar depreciates
VIEWStep 6: Examine what happens when the stock market booms in C
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