11-02-01a (2)

11-02-01a (2) - I ntroduction To Keynesian Models These...

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Unformatted text preview: I ntroduction To Keynesian Models These Slides Show How Our Y , Keynesian Analysis The Keynesian Model Assumes That Prices Are Given I n The Short Run, And That The Market-Clearing Equation For The Labor Market (The Y s Locus) Can Be I gnored (I n The Short Run). The Value Of The Price Level I n The Short Run I s Chosen As P = 2.7 (So That I ts Natural Logarithmic Value, p, I s Equal to 1.) Equations For Keynesian Model S + T I G = 0 S = -a + (1-b)Y d T = -70 + .33Y d- T C = a + bY d = +70 + .67Y d I = I hr = 190 1000r T = T = 300 G = G = 300 The Y d Equation -a +(1-b)Y d - T 0 + T I +hr G = 0 So, Y d = (a + G + I )/(1-b) hr/(1-b) Or, I n Numbers, Y d = 1680 3000r The LM Curve, With d = 0 m s T = p + m d +.00067Y - l r Or Y = 1500(m s T p m d + l r) Substituting In Our Favorite Numbers For The Benchmark Model, We Get: Y = 1500(7 1 5.12 + 2r) Simplifying Y = 1320 + 3000r Two Equations, Two...
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This note was uploaded on 07/16/2011 for the course ECON 2154 taught by Professor Boyer during the Winter '10 term at UWO.

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11-02-01a (2) - I ntroduction To Keynesian Models These...

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