Chapter 11공책 정리

Chapter 11공책 정리

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CH11 Aggregate Demand II: Applying the IS–LM Model 11.1 Explaining Fluctuations With the IS LM Model 11.1.1 How Fiscal Policy Shifts the IS Curve and Changes the Short-Run Equilibrium Changes in Government Purchases -> Increase in government purchase Δ G   - raises income Y, shifts IS curve to the right by Δ G /(1 −  MPC ) - also raises the interest rate L ˚ ‚ “) ,,,, IS curve > Keynesian cross b ²¶“)& - increase in government purchase -> increase in the economy’s planned expenditure -> stimulates the production of goods and services, causing the income Y to rise Money market X³²¶“ Theory of liquidity preference,,,, - Because the economy’s demand for money depends on income, the rise in total income increases the quantity of money demanded at every interest rate. - The supply of money has not changed, however, so higher money demand causes the equilibrium interest rate r to rise Keynesian cross X³² “) IS-³M curve b ) ¶“ r L N ˚ * ± «r ,, - When the interest rate rises, firms cut back on their investment plans. - This fall in investment partially offsets the expansionary effect of the increase in government purchases. - Thus, the increase in income in response to a fiscal expansion is smaller in the IS–³M model than it is in the Keynesian cross (where investment is assumed to be fixed) - The horizontal shift in the IS curve = the rise in equilibrium income in the Keynesian cross - This amount is larger than the increase in equilibrium income here in the IS–³M model. The difference is explained by the crowding out of investment due to a higher interest rate Changes in Taxes - government purchase change – , tax > consumption X ²¶“ PE b ²¶“ && Tax cut (decrease in taxes of Δ T )
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- encourages consumers to spend more and, therefore, increases planned expenditure - raises income at any given interest rate, shifts IS curve to the right by Δ T  ×  MPC /(1 −  MPC ) - The equilibrium of the economy moves from point A to point B - raises both income Y and interest rate r - because the higher interest rate depresses investment, the increase in income is smaller in the IS–LM model than it is in the Keynesian cross 11.1.2 How Monetary Policy Shifts the LM Curve and Changes the Short-Run Equilibrium - Increase in money supply M -> increase in real money balances M/P with price level P fixed in the short run - The theory of liquidity preference shows that for any given level of income, an increase in real money balances leads to a lower interest rate -> the LM curve shifts downward - The equilibrium moves from point A to point B. - The increase in the money supply lowers the interest rate and raises the level of income - IS-LM model > Keynesian cross > theory of liquidity preference ± A·“ ) adjustment When the Federal Reserve increases the supply of money, people have more money than they want to hold at the prevailing interest rate. As a result, they start depositing this extra money in banks or using it to buy bonds. The interest rate r then falls until people are
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Chapter 11공책 정리

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