Economics During the Period 1999-2000, Thesis

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But there have been other causes as well. For example, the collapse of the Soviet Union brought about a significant reduction in defense spending, bringing about a mini-recession in 1990. In the early 1980s a change in Federal Reserve policy brought about an increase in interest rates, which reduced investment both in terms of major consumer products (homes, cars) but also business investment as hurdle rates increased dramatically.

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10) 3) a) the marginal propensity to consume implicit in this data is an increase of 800 for every 1000 increase in income, or 0.8.

A b) the expenditure multiplier is 1 / (1- MPC) or 1 / (1-.8) = 5 c) to calculate the equilibrium GDP in this economy, we should build a graph. Where this economy meets with the 45 degree line is the point.....

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