ECON 2400 Lecture Notes - Lecture 10: Keynesian Cross
8 Oct 2015
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I=i0-ir*r: government expenditure, g: purchases of goods and services by government. A large part of g is determined by political and social factors, not by economic factors. G increases in crisis or recessions in order to get us out of recession or crisis. 3foreign output yf: =(e*pf)/p, pf price of european goods in euro, e dollars needed to buy one euro, e* pf price of european goods in canadian dollars/ dollars needed to buy one european good. Is price of european goods relative to canadian goods. If increases (real depreciation of dollar, european good is more expensive than ca goods) import decreases (we buy less of. X measures the sensitivity of net export to changes in . Xf measures the sensitivity of net export to changes in foreign income. Imy marginal propensity to imports measures the amount of import increases as domestic output increases by 1 unit. Autonomous expenditures (does not depend on y) +depend-on-y expenditures.
