unintended investment investment function planned unplanned investment

Unintended investment investment function planned

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unintended investment  investment function planned + unplanned investment = investment  autonomous aggregate expenditures doesn't vary with real gdp level  induced aggregate expenditures varies with real gdp level  aggregate expenditures function aggregate expenditures = consumption + planned investment  shape of aggregate expenditures curve aggregate expenditures/real gdp (between 2 points only!)  Y= real gdp  multiplier function Δ autonomous aggregate expenditures/(1-marginal propensity to consumer)  equilibrium real gdp occurs when... when aggregate expenditures = real gdp  steeper aggregate expenditure curve...
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larger multiplier  flatter aggregate expenditure curve... smaller multiplier  components of investment stock additions, nonresidential structures, residential investment, change in private inventories  depreciation consumption of a fixed capital  net investment equation gross investment-depreciation  gross private domestic investment stock additions to private capital  higher interest rates and investment higher interest rates reduce quantity of investment  investment demand curve shows quantity of investment demanded at each interest rate with all other determinants unchanged  determinants of investment expectations level of economic activity stock of capital capacity utilization cost of capital goods other factor costs
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technological change public policy  stock of capital investment replaces depreciated capital greater capital stock reduces investment  capacity utilization capacity utilization rate measure percentage of capital stock in use  repatriated profits off shore profits  Jobs creation act tax break on repatriated profits to spur job creation  entitlement spending government spending on automatic spending (programs people are entitled to like social security and compensation)  savings equals .... investment equals...  Business cycle facts there have been 11 since world war 2 are irregular and not periodic contractions last about 11 months expansions last about 59 months  Business cycle causes
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demand shocks internal dynamics of economy multiplier acceleration economic waves  what would Keynes do he would increase government spending  principal agent problem owners and employees have different incentives  money anything that serves as a medium of exchange  medium of exchange anything that's widely accepted as a means of payment  functions of money medium of exchange unit of account store of value  barter when goods are exchanged directly for other goods  unit of account consistent means of measuring value  store of value an item that holds value over time  commodity money money that has value apart from its use as money  fiat money
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money that an authority has ordered to be accepted as a medium of exchange  currency paper money and coins  checkable deposits balances in checking accounts  check
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