TO-Eco2013-Chap13 - Numerically and graphically show how a...

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Chapter 13 Objectives ! Explain the two key assumptions of the basic Keynesian model ! Define menu costs and discuss how they affect the decision to change prices ! Identify the contributions of John Maynard Keynes to economics ! Define planned aggregate expenditures ! Identify the components of planned aggregate expenditures ! Explain why planned spending may differ from actual spending ! Define autonomous and induced aggregate demand ! Define the consumption function and MPC ! Identify and define short-run equilibrium output
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Unformatted text preview: ! Numerically and graphically show how a decline in spending can cause a recessionary gap ! Define the income-expenditure multiplier ! Calculate the multiplier in the basic Keynesian model ! Define stabilization policy and automatic stabilizers ! Discuss the use of fiscal policy to stabilize aggregate demand ! Calculate the effects of government purchases, transfer payments and taxes on short-run equilibrium output ! Discuss the three qualifications to the use of fiscal policy as a stabilization tool...
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