Author Question: In the simple Keynesian model, if the tax function is given by T = 0.15Y and the consumption ... (Read 63 times)

tiara099 · **on:** Jun 30, 2018

In the simple Keynesian model, if the tax function is given by T = 0.15Y and the consumption function is C = 50 + 0.7YD then a 10-unit increase in government spending would increase equilibrium income by

a. 10 units.
b. 11.2 units.
c. 22.4 units.
d. 30 units.
e. none of the above

Question 2

According to Robert Gordon (1969, 1999), the extraordinary expansion of physical production in 194245 was achieved by

(a) massive government investment in new plants and equipment.
(b) finally bringing into production manufacturing plants and equipment that had been idle
since the early 1930s so that big government investment was not necessary.
(c) the Federal Reserve's peg on the bond market, which enrolled the private sector to
mobilize the necessary capital to invest in new plant and equipment.
(d) none of the above.