ECON 20 Lecture Notes - Lecture 18: Autarky, Xm Satellite Radio, Glossary Of Partner Dance Terms
Document Summary
Assumptions and simplifications: use the keynesian aggregate expenditures model, prices are fixed, gdp = di, begin with private, closed economy, consumption spending. Saving equals planned investment saving represents a leakage of spending investment can be thought of as an injection of spending. No unplanned changes in inventories: unplanned increases in inventories result when firms produce above-equilibrium gdp output level, unplanned decreases in inventories result when firms produce below-equilibrium gdp output level. Net exports and aggregate expenditures: exports (x) create domestic production, income and employment. Imports (m) represent goods and services produced abroad. In an open economy, aggregate spending is c+ ig + xn, where xn = (x - m: xn can be either positive or negative. Net exports and equilibrium gdp: a decline in net exports decreases aggregate expenditures and reduces gdp, a rise in net exports increases aggregate expenditures and increases gdp.