Increase in future government spending in the dynamic macro model: consider a two-period macroeconomic model with a representative household, a representative firm, and a government. The representative household makes consumption-saving and labor supply decisions. The representative firm makes labor demand and investment decisions. The government announces that an increase in government expenditure will occur next period. Use the model to study the effects on current aggregate output and current
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Increase in future government spending in the dynamic macro model: consider a two-period macroeconomic model with a representative household, a representative firm, and a
VIDEO ANSWER: We have a scenario where we have a decrease in government spending and so we find that it decreases the aggregate demand. I'm pretty sure that it…
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