This preview shows page 1. Sign up to view the full content.
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 ...
View Full Document
- Fall '08