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Unformatted text preview: I p = Planned investment ( i + ii above) 5. Equilibrium: Quantity supplied = Quantity demanded; y = PAE; I = I p a. If I I p > 0, then inventory accumulation b. If I I p < 0, then inventory depletion 6. Components of PAE a. Consumption Function i. Autonomous consumption ii. Induced consumption: c(y T) iii. Where: c = Marginal Propensity to Consume (MPC) iv. Where:(y T) = Disposable income b. Planned Investment, Government Spending, Net Exports i. All determined exogenously (outside of model) III: NEXT TIME A. Continue Chapter 13: Spending and Output in the Short Run...
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This note was uploaded on 07/31/2008 for the course ECON 2035 taught by Professor Stahl during the Spring '08 term at LSU.
- Spring '08