Suppose that initially . Then there is a demand shock to consumption where and the Then short-run output will rise by 1%See page 246-247 (of Jones Macro Econ) Starting a bit into the IS curve calculation, we know that Plugging in our given numbers (and I suppose assuming that consumption increasing by 5% is to mean that increases by 5%) The short-run economy will rise by 1%. |

Teaching - Curtis Kephart > Econ 100B Intermediate MacroEconomics (Homework and exam examples) > Econ100b Macroeconomics Mid-Term-2 Review >