Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. What assumption does this model make about production? a. Higher spending leads to higher inflation b. Higher saving is required to raise output c. Production always adjusts to match expenditure d. Higher investment raises its productivity

Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. What assumption does this model make about production? a. Higher spending leads to higher inflation b. Higher saving is required to raise output c. Production always adjusts to match expenditure d. Higher investment raises its productivity

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 7QP

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