In the Keynesian Model with Government and the Foreign Sector

question 375

Essay

In the Keynesian model with government and the foreign sector added, what are the components of spending? Which of these components are autonomous and which are NOT? How is the equilibrium found? When the economy is NOT at an equilibrium, what adjustments are made?

---

Definitions:

Direct Approach

A method of preparing the statement of cash flows where major categories of gross cash receipts and payments are reported.

Indirect Approach

A method of communication or problem-solving that is not straightforward, often involving suggestion or implication rather than direct statements.

Investing Activities

Financial operations that involve the purchase and sale of long-term assets and other investments not considered cash equivalents.

Financing Activities

Refers to the transactions and events that affect long-term liabilities and equity of a company, including issuing debt, selling shares, and paying dividends.