Chapter14LectureNotesSAK

Chapter14LectureNotesSAK - Intermediate Macroeconomics...

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Unformatted text preview: Intermediate Macroeconomics Chapter 14: Stabilization Policy Instructor Geoffrey Williams Rutgers University June 26, 2009 Instructor Geoffrey Williams Chapter 14: Stabilization Policy Outline Instructor Geoffrey Williams Chapter 14: Stabilization Policy The IS-LM Model... Instructor Geoffrey Williams Chapter 14: Stabilization Policy ...helps us determine aggregate demand Instructor Geoffrey Williams Chapter 14: Stabilization Policy Two Policy Levers The IS-LM model gives us two policy levers: Y = C ( Y- T ) + I ( r ) + G (IS) We can increase the difference between T and G or M / P = L ( r , Y ) (LM) We can increase M. Instructor Geoffrey Williams Chapter 14: Stabilization Policy Two Policy Levers The IS-LM model gives us two policy levers: Y = C ( Y- T ) + I ( r ) + G (IS) We can increase the difference between T and G or M / P = L ( r , Y ) (LM) We can increase M. Instructor Geoffrey Williams Chapter 14: Stabilization Policy Two Policy Levers The IS-LM model gives us two policy levers: Y = C ( Y- T ) + I ( r ) + G (IS) We can increase the difference between T and G or M / P = L ( r , Y ) (LM) We can increase M. Instructor Geoffrey Williams Chapter 14: Stabilization Policy The Monetary Lever Instructor Geoffrey Williams Chapter 14: Stabilization Policy The Fiscal Lever Instructor Geoffrey Williams Chapter 14: Stabilization Policy How much do we trust policymakers? The Federal Reserves job is to take away the punch bowl just as the party gets going. William McChesney Martin What we need is not a skilled monetary driver of the economic vehicle continuously turning the steering wheel to adjust to the unexpected irregularities of the route, but some means of keeping the monetary passenger who is the in the back seat as ballast from occasionally leaning over and giving the steering wheel a jerk that threatens to send the car off the road....
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This note was uploaded on 02/29/2012 for the course 320 322 taught by Professor Macro-williams,micro-yoshi during the Fall '10 term at Rutgers.

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Chapter14LectureNotesSAK - Intermediate Macroeconomics...

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