spending and output in the short run n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Spending and Output in the Short Run PowerPoint Presentation
Download Presentation
Spending and Output in the Short Run

Loading in 2 Seconds...

play fullscreen
1 / 12

Spending and Output in the Short Run - PowerPoint PPT Presentation


  • 115 Views
  • Uploaded on

Spending and Output in the Short Run. Chapter 13. Chapter 13 Learning Objectives. You should be able to:. List the components of investment. Distinguish between actual and planned aggregate expenditure. Describe the consumption function, graph the consumption function.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Spending and Output in the Short Run' - wheeler


Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
chapter 13 learning objectives you should be able to
Chapter 13 Learning Objectives. You should be able to:
  • List the components of investment.
  • Distinguish between actual and planned aggregate expenditure.
  • Describe the consumption function, graph the consumption function.
  • Distinguish between autonomous and induced expenditure.
  • Use the Keynesian cross diagram to determine short-run equilibrium output.
  • Describe the expenditure multiplier and show its effect on the Keynesian cross diagram.
  • Explain how fiscal policy is used to stabilize the economy.
  • Define automatic stabilizers.
aggregate expenditure national income
Aggregate Expenditure & National Income

AE = C + I + G + NX

AE = Y

investment components
Investment Components
  • Plant and equipment, office buildings
  • Inventories
  • Residential housing
planned aggregate expenditure
Planned Aggregate Expenditure
  • Planned Aggregate Expenditure
spending
Spending

Autonomous: the same regardless of the level of income

Induced: dependent on the level of income

rate of change of y with a change in g
Rate of change of Y with a change in G

where c is the marginal propensity to consume

okun s law
Okun’s Law

For every 2% change in the output gap, unemployment changes 1%.

So with a 4% recessionary gap, expect unemployment to be 2% greater than the natural rate.

fiscal policy
Fiscal Policy

Government spending.

Taxes.

Under the control of the Treasury.

automatic stabilizers
Automatic Stabilizers

Taxes.

Unemployment insurance.

Welfare.