{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture 8 Introduction to the goods market

# Lecture 8 Introduction to the goods market -...

This preview shows pages 1–3. Sign up to view the full content.

!"# %&'() *+,, &'-') ./012330/ 42+5/67 .++, 89:+52: ;<-&<&'-' ;=>; .? ([email protected]/2 A= (+B0/ ?+/C25 !D86,6B/68E ! !"#\$%&" ( "#\$%&'()\$*&# \$& \$+, -&&'. /0%1,\$ Last time finish labor supply: the labor supply curve ( Chapt e r 3 . 3 ) labor market equilibrium ( Chapt e r 3 . 4 ) the FE line ( Chapt e r 9 . 1 ) TFP experiments ( Chapt e r 3 . 4 ) read on your own: unemployment ( Chapt e r 3 . 5 ) Today introduction to the goods market ( Chapt e r 4 . 1 ) the consumption/saving choice ( Chapt e r s 4 . 1 and 4 . A ) Next time the consumption/saving choice ( Chapt e r s 4 . 1 and 4 . A ) 2+0\$ +033,#. \$& \$+, &(\$3(\$ 3%&'(),'4 How aggregate output is used, is determined in the goods market From the national income accounting identity, output is used as one of the expenditure components Y = C + I + G + NX Reinterpret this accounting identity as an equilibrium condition: The goods market is in equilibrium when the d e s ir e d levels of expenditure components (demand) add up to total output produced (supply). Assumptions for now: Desired government purchases are determined by the political process and we treat them as exogenous from an economic perspective. Same for taxes. (We will not relax this assumption) The economy is closed so that NX = 0, and NFP = 0. (We will study open economies later) Implications: we need to analyze the desired amounts of consumption and investment: ܥ ܫ d d Y C I G ± ±

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
!"# %&'() *+,, &'-') ./012330/ 42+5/67 .++, 89:+52: ;<-&<&'-' ;=>; .? ([email protected]/2 A= (+B0/ ?+/C25 !D86,6B/68E # 5+, ,6(*7*8%*(/ )&#'*\$*&# &9 \$+, -&&'. /0%1,\$ The form of the condition that focuses on goods in a closed economy, and assuming G is fixed, the equilibrium condition of the goods market is An alternative form that focuses on the flow of funds Recall that national saving was defined as S = Y + NFP ± C ± G .
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 6

Lecture 8 Introduction to the goods market -...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online