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ECON 203 Lecture 11: February 14th

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viridianbuffalo543

3 Mar 2017

School

Concordia University

Department

Course

Professor

Anca Alecsandru

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Document Summary

Taxes when the amount of taxable income (y ), given the existing taxation system, people will pay less in taxes. Aggregate demand and aggregate expenditure: market value of final goods and services purchased by households (c), businesses (i), government (g) and foreign buyers (x) ** final goods and services are domestically produced. The demand curve is downward sloping (the law of demand) Autonomous expenditure: spending independent of income (y) spending by consumers with no work income consumer confidence spending on necessary goods. Ad = c + i + g + nx. Ae = c + i + g + nx = y. Planned ae only at equilibrium (ae = (ae = y) Consumption function (c): autonomous consumption spending (independent of income) + consumption spending dependent on y (disposable income) = change in consumption caused by change in income and slope of the c function. < 1 when y , c but by less than the decrease in y consumption smoothing.

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Related Questions

Algebraic IS-LM problem , given these:

IS: I= 100-10i, S= -50+.25 YD, YD= Y-T, T=.2Y, G=50, Equilibrium condition IS: I+G=S+T

LM: Lt= .2y, La= 200-5i, M/P=200, Equilibrium condition LM: Lt+La=M/P

1. find equilibrium for IS curve (y=f(i), i=g(y))

2. find equilibrium for LM curve (y=f(i), i=g(y))

3. find equilibrium i, y

4. let the money supply increase by 50 (what happens to equilibrium y,i (multiplier))

5. let y increase by 20

Algebraic IS-LM problem , given these:

IS: I= 100-10i, S= -50+.25 YD, YD= Y-T, T=.2Y, G=50, Equilibrium condition IS: I+G=S+T

LM: Lt= .2y, La= 200-5i, M/P=200, Equilibrium condition LM: Lt+La=M/P

1. find equilibrium for IS curve (y=f(i), i=g(y))

2. find equilibrium for LM curve (y=f(i), i=g(y))

3. find equilibrium i, y

4. let the money supply increase by 50 (what happens to equilibrium y,i (multiplier))

5. let y increase by 20

Solve for equilibrium Y and I given:

C = 300 + .40YD

I = 200 + .15Y - 1000i

G = 220

T = 120

(M/P)^D = 2Y - 4000i

M/P = 1520

A: Write the equation for the IS curve, Y =

B: Write the equation for the LM curve, Y =

C: Find the equilibrium for Y and i