econ final

econ final - 11/17/10 A. Aggregate Demand 1. Expenditure...

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11/17/10 A. Aggregate Demand 1. Expenditure approach, national income accounting a. Foundation i. y = C + I +G + X – IM ii. C = consumption iii. I = investment iv. G = government spending v. X = exports vi. IM = imports b. Determinants of quantity of real GDP demanded i. real wealth effect ii. interest rate effect - interest rate falls, dollar depreciates, but real GDP goes up iii. exchange rate effect i. as dollar depreciates, GDP goes up c. Determinants of Aggregate Demand i. Monetary policy -fiscal policy and monetary policy are not related; fiscal policy is made by Congress - expansionary (+) - contractionary (-) ii. Fiscal policy - government spending (+) a. The U.S. Congress passes a bill which appropriates $70 billion for roads in the U.S. Because this has nothing to do with the Fed, the money supply remains unchanged - taxes (-) iii. Expectations - consumer confidence - business confidence iv. Foreign economic growth (+) v. exchange rate change (-) 11/22/10 A. Aggregate Supply 1. Short run (SRAS) vs. Long run (LRAS) a. determinant of quantity of real GDP supplied i. short run ii. long run b. determinants of SRAS i. labor costs (wage push) (-) ii. other input costs (supply shocks) (-)
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This note was uploaded on 10/19/2011 for the course ECON 2030 taught by Professor Bong during the Spring '07 term at LSU.

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econ final - 11/17/10 A. Aggregate Demand 1. Expenditure...

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