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Lecture5020608

# Lecture5020608 - UGBA101B Macroeconomic Analysis for...

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Wednesday, Week #3 February 6, 2008 Lecture #5 1 UGBA101B Macroeconomic Analysis for Business Decisions James A. Wilcox Haas School of Business

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Wednesday, Week #3 February 6, 2008 Lecture #5 2 Outline Read Appendix to Chapter 3 More on Multipliers Interest Rates Affect Spending IS Curve: Slides, Shifts, and Slopes Homework #1 Tonight via Catalyst Due Next Wednesday, Feb. 13, at Lecture
Wednesday, Week #3 February 6, 2008 Lecture #5 3 Consider These • Does more spending (via higher A p ) cause more or less saving? • If c rose, what happens to Y, C, T, S? • Next, assume that taxes and imports each rise with income

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Wednesday, Week #3 February 6, 2008 Lecture #5 4 Old Method, New Injections and Leaks 1. Y = Ep = C + Ip + G + NX 2. C = C a + c · (Y-T) 3. T = T a + t · Y 4. I = Ip 5. G = G 0 6. NX = NX a nx Y 7. A p = C a -c·T a + Ip + G + NX a 8. Y = A p + (c(1-t)- nx )·Y 9. Y = A p /((1-c(1-t)+ nx) 10.1-c(1-t)+ nx = (1-c)+ct+ nx=s + (1-s)t + nx = s(1-t) + t + nx 11.Y = Ap/( s(1-t) + t + nx)
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Lecture5020608 - UGBA101B Macroeconomic Analysis for...

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