EXHIBIT 1 Autonomous Government Spending and Net Exports Curves

Slides:

Advertisements

Similar presentations

DETERMINATION OF NATIONAL INCOME in the Keynesian Model

Advertisements

Graphs in order to survive Mr. Forrest’s class

Income and Expenditures Equilibrium. 2 Equilibrium Real GDP: mpc =.7, mpi =.1 (1) Real GDP (Y) (2) Consumption (C) (3) Investment (I) (4) Gov’t Spending.

25 Demand-Side Equilibrium: Unemployment or Inflation? A definite ratio, to be called the Multiplier, can be established between income and investment.

Introduction to Macroeconomics

Intermediate Macroeconomics Chapter 5 The Keynesian Model.

Economic Instability: A Critique Of The Self Regulating Economy.

Chapter 11 Homework Number 1: Lauren Number 4: Travis Number 8: Stephanie Number 14: Nicole Alternate: Kelly.

28 EXPENDITURE MULTIPLIERS: THE KEYNESIAN MODEL © 2012 Pearson Addison-Wesley.

Product Markets and National Output Chapter 12. Discussion Topics Circular flow of payments Composition and measurement of gross domestic product Consumption,

Copyright © 2010 Pearson Education. All rights reserved. Chapter 20 The ISLM Model.

CHAPTER 12 Measuring Economic Activity. 1. Components of aggregate expenditures C + I + G + (X-M) 2. Personal Consumption Expenditures (C) Factors affecting.

Spending and Output in the Short Run Chapter 13. Chapter 13 Learning Objectives. You should be able to: List the components of investment. Distinguish.

The Keynesian Framework and the ISLM Model

Keynesian Expansionary Fiscal Policy

Chapter 7 Multipliers, Government Budgets and Net Exports

Aggregate Supply.

Frank & Bernanke Ch. 15: Inflation, Aggregate Demand, and Aggregate Supply.

Chapter 10 The Multiplier, Net Exports, & Government.

HOMEWORK PROBLEMS 9, 10, 12, 13 page 185

The Keynesian Model in Action To complete the Keynesian model by adding the government and the foreign sector.

The Aggregate Expenditures Model 28 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

1 ECON203 Principles of Macroeconomics Topic: Expenditure Multipliers: The Keynesian Model Dr. Mazharul Islam 9W/10/2013.

Chapter 23 The Keynesian Framework and the ISLM Model © 2005 Pearson Education Canada Inc.

CHAPTER 9 Economic Instability ECONOMICS, 5e Roger Arnold ECONOMICS, 5e Roger Arnold.

Consumption, Savings, and Aggregate Expenditures

Factors that shift the consumption function 1. Changes in wealth – shift the consumption function. – Example: value of stocks, bonds, consumer durables.

Unit 3 Problem Set Rubric

Chapter 10 Figure 10.1(a) The Investment Demand Curve.

Copyright 2008 The McGraw-Hill Companies 9-1 Consumption and Investment Equilibrium GDP Equilibrium GDP and the Multiplier International Trade Government.

Chapter 23 The Keynesian Framework and the ISLM Model.

Ch 14. Monetary Policy.

1 of 17 Principles of Economics: Econ101.  Keynes on Say’s Law  Keynes on Wage Rates and Prices  Consumption Function  Equilibrium Real GDP and Gaps.

The Aggregate Expenditures Model Chapter 28 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Keynesian Cross Add G and NX 1. What we have so far: AE = C + I = C auto + MPC x Y D = a + bY + I = (a + I) + bY But recall, Y = C + I + G + NX Government:

Aggregate Expenditures: The Multiplier, Net Exports, and Government CHAPTER TEN.

1 Chapter 19 The Keynesian Model in Action Key Concepts Key Concepts Summary Summary Practice Quiz Internet Exercises Internet Exercises ©2002 South-Western.

Aggregate Supply and Aggregate

Chapter 22 The Keynesian Framework and the ISLM Model.

BU204 - Macroeconomics Unit 7 Seminar. Key Terms Assignment Potential Output Recessionary gap Expansionary fiscal policy Inflationary gap Contractionary.

If MPS = 0.4, the government spending multiplier is Assessment (a) 0.25 (b) 2.5 (c) 25.

© 2008 Pearson Education Canada22.1 Chapter 22 The ISLM Model.

1 The Keynesian Model in Action. 2 What is the purpose of this chapter? To complete the Keynesian model by adding the government (G) and the foreign sector.

Chapter 22 The Keynesian Framework and the ISLM Model.

9 9 Demand-Side Equilibrium: Unemployment or Inflation? A definite ratio, to be called the Multiplier, can be established between income and investment.

1 FINA 353 Principles of Macroeconomics Lecture 8 Topic: Expenditure Multipliers: The Keynesian Model Dr. Mazharul Islam.

Unit 3 Problem Set Rubric

Real Balances (or wealth) Effect Foreign purchases effect

ECO 121 Macroeconomics Lecture Ten Aisha Khan Section L & M

The Keynesian Cross Chapter 9 Appendix McGraw-Hill/Irwin

Chapter 19 The Keynesian Model in Action

Chapter 28 The Aggregate Expenditures Model McGraw-Hill/Irwin

30.2 Graphing Aggregate Expenditure

If the MPC is .90 and the government spends $400 Billion dollars, what is the multiplied effect on GDP? 1/1-MPC = 10; $400/10 = $4,000 Billion.

3.1 – 3.4 Review.

The Keynesian Cross Chapter 9 Appendix McGraw-Hill/Irwin

AD/AS Model & Multipliers

AD/AS and Fiscal Policy.

Aggregate Expenditures

Chapter 20 The ISLM Model.

EXHIBIT 1 The Aggregate Demand Curve

The Keynesian Framework and the ISLM Model

Chapter 11- Aggregate Demand/Aggregate Supply

Name _________________ Worksheet – Multipliers and Fiscal Policy

Unit Three: Test Review.

The Aggregate Expenditures Model

Unit 3 Problem Set Rubric

9 The Aggregate Expenditures Model O 9.1.

AD/AS Model & Multipliers

Presentation transcript:

EXHIBIT 1 Autonomous Government Spending and Net Exports Curves 19 EXHIBIT 1 Autonomous Government Spending and Net Exports Curves ( a ) A u t o n o m o u s g o v e r n m e n t s p e n d i n g ( b ) A u t o n o m o u s n e t e x p o r t s 2 . + . 4 I n c r e a s i g o v m t p d 1 . 7 5 + . 3 1 . 5 G 1 + . 2 P o s i t v e n x p r 1 . 2 5 + . 1 ( X – M ) 2 1 . G ( X – M ) Z e r o n t x p s . 7 5 – . 1 ( X – M ) 1 N e g a t i v n x p o r s . 5 G 2 – . 2 D e c r a s i n g o v m t p d . 2 5 – . 3 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 R e a l G D P R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r ) ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT 3 The Keynesian Aggregate Expenditures–Output Model 19 EXHIBIT 3 The Keynesian Aggregate Expenditures–Output Model A E = Y 4 5 o 8 I n v e t o r y a c u m l i 7 A E 6 R e a l a g g r e g a t e E 5 e x p e n d i t u r e s ( t r i l l i o n s o f d o l l a r s 4 p e r y e a r ) 3 2 I n v e t o r y d p l i F u l e m p o y n t 1 + G D P g a p 1 2 3 4 5 6 7 8 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

19 EXHIBIT 4 The Spending Multiplier Effect of a Change in Government Spending A E = Y A E 2 A E 1 E 1 6 . e R e a l c o n s u m p t i o n c d a n d g o v e r n m e n t a 5 . 5 p u r c h a s e s b D G = + $ . 5 t r i l o n D Y = + $ . 5 t r i l o n ( t r i l l i o n s o f d o l l a r s p e r y e a r ) 5 . E F u l e m p o y n t 5 . 5 . 5 6 . R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r ) C A U S A T I O N C H A I N I n i t a l c r e s g o v m p d O p e r a t s h o u g m l i L a r g e i n c s t x p d u

EXHIBIT 7 A Recessionary Gap 19 EXHIBIT 7 A Recessionary Gap 4 5 ° A E = Y 8 A E 2 7 E 2 6 A E 1 R e c s i o n a r y g p = $ 1 t l A g g r e g a t e 5 e x p e n d i t u r e s a ( t r i l l i o n s E 1 o f d o l l a r s 4 p e r y e a r ) 3 2 F u l e m p o y n t 1 + G D P g a p 1 2 3 4 5 6 7 8 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT 8 An Inflationary Gap 19 EXHIBIT 8 An Inflationary Gap A E = Y 4 5 ° 8 A E 1 7 E 1 6 A E 2 I n f l a t i o r y g p = $ 1 A g r e a t x p n d i u s ( l o f y ) a 5 4 E 2 3 2 F u l e m p o y n t 1 – G D P g a p 1 2 3 4 5 6 7 8 R e a l G D P ( t r i o n s f d p y )

19 EXHIBIT 9 Keynesian Aggregate Expenditures–Output Model When the MPC Is 3/5 1 4 5 o 9 8 A E R e a l 7 a g g r e g a t e e x p e n d i t u r e s 6 E ( t r i l l i o n s o f 5 d o l l a r s p e r y e a r ) 4 3 2 F u l e m p o y n t 1 1 2 3 4 5 6 7 8 9 1 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )