Macro 9.24 - PrT GDP identity & Equilibrium Condition...

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Exams are cumulative 1 st Exam: 20% 2 nd Exam: 30% Final Exam: 40% Section Grade: 10% Reading: Chapter 8 pp151-164, Ch 9 including appendix Theory of income + output determination Analytical framework- Key diagrams 1) Income expenditure diagram 2) Aggregate Demand- Aggregate Supply Diagram 3) MKT for all Goods and services Simplifying Assumptions 1. No government 2. Closed economy 3. “Slack” conditions a. Prices are “sticky” b. Unemployment and excess capacity: Y < Y
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Unformatted text preview: PrT GDP identity & Equilibrium Condition Notation: y= Real Income = Real output C = Real consumption Expenditures I – Real Investment Expenditure GDP EXP = C + I = Y Two interpretations: GDP identity: Always True: C a + I a Actual Expenditure Determinants of consumption expenditures 1. Current Income 2. Expected future income 3. Real wealth (both financial and important durable goods like housing)...
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This note was uploaded on 04/15/2008 for the course ECON Macro taught by Professor Macinni during the Fall '07 term at Johns Hopkins.

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Macro 9.24 - PrT GDP identity & Equilibrium Condition...

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