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Unformatted text preview: will decrease total investment demand. I^p=I^p(R), with Change in I^p / Delta R <0-Planned investment- firms demands for loans=I^p In measuring GDP we have seen total investment includes the change in firms inventories. So in Nationsl Income accounts, that is, in GDP accounts, total investment is the sum of planned investment and the change in inventories. Total Investment= I^p + Delta(inventories) It is always the case that Y= C+I+G+NX The governments demand for output: We denote total government purchases of widgets, goods and services, by G. Total spending is Total spending= G+ Transfer payments This spending is financed with taxes or by borrowing, so G+Transfer payments= total taxes + government demand for loans....
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This note was uploaded on 03/18/2008 for the course ECON 2006 taught by Professor Rdcothren during the Fall '08 term at Virginia Tech.
- Fall '08