ECON 203 Lecture 10: February 9th
3 Mar 2017
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Document Summary
Objective: understand the importance of government policies, its influence on buyer"s behaviors. P = average price for the entire production (output) Us jobless claims u rate (workers were able to keep their jobs) Ex: the government finances a new hospital/school. This project of public interest will create jobs, will increase economic activity. The outcome of this effort is measured by the change in output (income, gdp: government effect: g (subsidies are given for production that takes place anyway) The added (additional marginal) effect on the economy ( , ) is expected to be greater than the initial effort ( ) A decrease in consumer confidence (consumers are pessimistic about the future) is shown in the ad-as model by a downward shift in the ad curve. We use another model to show changes in spending depending on income: Aggregate expenditure model: total spending as a function of income. Consumption spending depending on income (spending and income is positively related)
