Continue with the same equations.
a. What is the value of G which corresponds to the simple multiplier (with taxes) of Chapter 9 ?
b. By how much does an increase in government spending of ? --G increase the level of income in this model, which includes the money market?
c. By how much does a change in government spending of ? --G affect the equilibrium interest rate? d. Explain the difference between your answers to parts ( a ) and ( b ).