Government Demand for Funds Increases the Demand for Money - PowerPoint PPT Presentation

Government demand for funds increases the demand for money
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Government Demand for Funds Increases the Demand for Money. Loanable Funds Market. I and i are the initial equilibrium values. D = private sector demand for funds (Investment) D + (G–T) = private + government demand for funds I1 and i1 are the new equilibrium values.

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Government Demand for Funds Increases the Demand for Money

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Government demand for funds increases the demand for money

Government Demand for Funds Increasesthe Demand for Money

Visual 5.1

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Loanable funds market

Loanable Funds Market

I and i are the initial equilibrium values.

D = private sector demand for funds (Investment)

D + (G–T) = private + government demand for funds

I1 and i1 are the new equilibrium values.

I2 = new level of private investment

I1 – I2 = government demand for funds (G–T)

Visual 5.2

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The effects of policy changes in multiple markets

The Effects of Policy Changes inMultiple Markets

Visual 5.3

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Short run phillips curve

AD and SRAS and Short Run Phillips Curve

Short-Run Phillips Curve

Holding constant

1. Expected inflation rate

2. Natural rate of unemployment

Visual 5.4

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