GDP - GDP = ∆ spending x 1(1-MPC Formula to calculate the...

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CHAPTER 6 FORMULAS Planned Aggregate Expenditure is expressed as: AE = C + I + G + X – M Use the Expenditure Multiplier formula: Δ GDP = AD x 1/ (1-MPC) The Tax Multiplier: GDP = - ( taxes x MPC / (1 – MPC)) Balanced Budget Multiplier GDP = - ( taxes x MPC / (1 – MPC))
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Unformatted text preview: GDP = ∆ spending x 1 / (1-MPC) Formula to calculate the change in the recessionary gap: ∆ GDP= ∆ AD(1/1-MPC) Foreign Trade Multiplier But when you consider imports you have MPS + MPC + MPM = 1 , where MPM = ∆ imports/ ∆ income Expenditure Multiplier ∆ GDP = 1/(MPS + MPM)...
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This note was uploaded on 02/05/2011 for the course ECON 011 taught by Professor Yezer during the Fall '07 term at GWU.

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