Chapter 22 - Governement and trade

Chapter 22 - Governement and trade - We are building a...

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19:19 We are building a model set of assumptions (highly simplified views of the  world) Provide insights on how the world works.  CH 22 Adding Government and trade . Endogenous and exogenous  Exogenous value that is determined outside the model we are considering Endogenous is determined by model we are considering Why should marginal propensity to consume be less than one? Answer page 502 MPC=1 not very forward looking Income goes up but don’t change consumption MPC=0 Why did they lower interest rate to stimulate economy. If interest fall this model predicts that desired investment will rise,  Output is demand determined.  What can affect the AE function business confidence/ changes in wealth  collapse of stock market. 22.1 introducing government Government purchases Government purchase of goods and services (G) are part of desired  aggregate expenditures. -
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Chapter 22 - Governement and trade - We are building a...

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