Models - Econ 4.3 Monday April 5 1999 Announcements There...

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Econ 4.3 Monday, April 5, 1999 Announcements: There will be review session in 262 Willard on Tuesday, 4/6, from 6:30 to 8 pm. The exam is Wednesday, 4/7. See the webpage for exam three materials. The exam will cover chapters 10 to 14. Lecture notes: Models Money Market Interest rate decreases Opportunity cost of holding money increases Demand for Investment New technology would shift curve to the right AE Model AE = C + I + G + (EX - IM)
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Unformatted text preview: Multipliers • 1. Expenditure o 1 / 1 - MPC = 1 / MPS • 2. Tax Multiplier o 1 / MPS - 1 (add negative sign) • 3. Balanced Budget Multiplier o 1 • 4. Money Multiplier o 1 / rr • Withdrawals and Injections • W = S + T • J = I + G + (EX - IM) • Contractionary Monetary Policy reduces the money supply and shifts the curve to the left • Excess demand in a short run / long run curve tends to lead to raised prices...
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