17Chp20-Econ3310

17Chp20-Econ3310 - Expenditure Multiplier = 1 1−mpc...

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Unformatted text preview: Expenditure Multiplier = 1 1−mpc > 1, the expenditure multiplier = a + mpc × (Y − T ) + I + G + NX mpc × T a + I + G + NX − = 1 − mpc 1 − mpc = C + I + G + NX ISLM Model An increase in net exports leads to an even larger increase in output ∆Y ∆NX ⇔Y ⇔Y Y Now suppose there is international trade, i.e. NX = 0 Role of International Trade Aggregate Output ...
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