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Lecture 13 Fiscal policy in Equilibrium plus IS curve deskpdf

Lecture 13 Fiscal policy in Equilibrium plus IS curve deskpdf

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ECO 320L, Fall 2010, Professor Beatrix Paal updated 9/24/2010 12:14 PM Lecture 11: Goods Market Equilibrium Lecture 11       Last time fiscal policy introduction ( Chapter 4.1 and 4.A ) fiscal policy experiment A ( Handout 4.1 ) Today fiscal policy experiments B and C ( Handout 4.1 ) government expenditures and crowding out ( Chapter 4.3 ) the shifters of the national saving curve ( Chapter 4.3 ) the IS curve ( Chapter 9.2 ) Next time in class: review session for Midterm 1 Midterm 1 , 7:00 – 9:00 pm UTC 2.102A     Effects of an increase in G initial equilibrium is subscripted with 1 saving curve shifts to the left new equilibrium has – higher r – lower I – lower C . Why? lower PVLR higher r 2 “crowding out” the increase in G causes both I and C to fall: I and C are “ crowded out From the fixed amount of available resources Y, the government consumes more. Less is left for consumption and investment.
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