Consider a closed economy with two classes of consumers : industrial workers and agricultural workers . The former pay tax while the latter don’t . The former live in cities and spend more . Therefore , their marginal propensity to consume is greater than the same of the latter . Industry generates proportion of the GDP where 0 < hcl . Calculate the equilibrium GDP of this keynesian demand driven economy with autonomous investment and government expenditure . Show that the Balanced Budget Multiplier is less than 1. Explain why ?
Answer:
They are put here because students often think it is helpful to see past … non-working age group population to working age population … Growth of the durable consumer goods industry.
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