Lecture 20 Notes

Lecture 20 Notes - 10/26/09 1 ECN 211 Macroeconomic...

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Unformatted text preview: 10/26/09 1 ECN 211 Macroeconomic Principles L20:Equilibrium in the Keynesian Model (continued) 10/26/09 2 Another way to look at equilibrium: Injections and Leakages In equilibrium injections of income into the economy equal Leakages of income from the economy. There is no pressure on real GDP to change. Injections = I + G + X Leakages 10/26/09 2 Another way to look at equilibrium: Injections and Leakages In equilibrium injections of income into the economy equal Leakages of income from the economy. There is no pressure on real GDP to change. Injections = I + G + X Leakages = S + T + M In equilibrium Injections = Leakages I + G + X = S + T + M Note: Not saying in equilibrium that we must have I=S, G=T, and X=M 10/26/09 3 Injections Remember we assumed investment, Government spending and exports are all autonomous (constants). Therefore injections do not vary with income. Eg. I = 50, G=70, X=100 E.g. I + G + X = $220 10/26/09 4 Injections....
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This note was uploaded on 03/03/2010 for the course ECN 211 taught by Professor Kingston during the Spring '08 term at ASU.

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Lecture 20 Notes - 10/26/09 1 ECN 211 Macroeconomic...

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