ECON 1102 Chapter Notes - Chapter 11: Glossary Of Partner Dance Terms, Open Economy, Autarky
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Investment can be thought of as an injection of spending. Unplanned increases in inventories result when rms produce above-equilibrium gdp output level. Unplanned decreases in inventories result when rms produce below-equilibrium. 11. 5 changes in equilibrium gdp and the multiplier. In the private closed economy, the equilibrium gdp will change in response to changes in either the investment schedule or the consumption schedule. Because changes in the investment schedule usually are the main source of. 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 is (x-m) Xn can be either positive or negative. If gdp in other countries is growing, demand for our exports will increase. Our imports are dependent on our own gdp. Both imports and exports are affected by the exchange rate. Mpm is the slope of the net export schedule. Open economy multiplier = 1/(mps + mpm)