Using the ldquonew keynesianrdquo model suppose households


Using the “New Keynesian” model, suppose households increase their rates of savings (due to some exogenous event). What will happen to real GDP and to the amount of labor employed, aggregate consumption, and aggregate savings? Compare these results to those predicted by the equilibrium business cycle model developed by Barro throughout the text.

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Finance Basics: Using the ldquonew keynesianrdquo model suppose households
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