7Chp20-Econ3310 - Expenditure Multiplier − + = a + mpc ×...

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Unformatted text preview: Expenditure Multiplier − + = a + mpc × Y + I + = C (Y ) + I ( i , BE ) The discrepancy between Y AD and Y is unplanned inventory investment Y AD Aggregate demand is Assume for now G = T = 0, i.e. no government, such that Yd = Y , Assume for now that NX = 0, i.e. a closed economy 1. Negatively on interest rates i 2. On business expectations BE What determines I,G,NX? Planned investment spending I depends: Other demand components Aggregate Output ISLM Model ...
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