MACROECONOMICS: 4. The economy is at full employment and an election is coming up. To make sure they’re all re-elected, various officials decide to increase government spending by $100 billion. Senator Graham says the money should be spent on improving education and transport systems. Senator Dole proposes building several very large Coast Guard training facilities in states that currently have none, including Kentucky, Nebraska, Nevada, and Arkansas.

Part b) B. What effect would Senator Graham’s proposal have on the AD/AS model? Describe all shifts as well as the effects on short-run and l

Question

MACROECONOMICS: 4.	The economy is at full employment and an election is coming up. To make sure they’re all re-elected, various officials decide to increase government spending by $100 billion. Senator Graham says the money should be spent on improving education and transport systems. Senator Dole proposes building several very large Coast Guard training facilities in states that currently have none, including Kentucky, Nebraska, Nevada, and Arkansas.

Part b) B.	What effect would Senator Graham’s proposal have on the AD/AS model? Describe all shifts as well as the effects on short-run and l