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ECON 1BB3 (535)
Lecture

Lecture 26.docx

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Department
Economics
Course
ECON 1BB3
Professor
Hannah Holmes
Semester
Winter

Description
Lecture 26 (Closed Economy) Economy in a boom - Economy is flourishing, they need to produce more and leads to a higher number of workers required. So they will hire more.And leads to lower unemployment - There will be an upward pressure on wages. The motive to get workers into working for the company. - W/P (labour) will be more expensive. Firms will cut back production at this point. SRAS shifts left. Fiscal Policy o Multiplier and crowding out o Government spends $10 million Liquidity Preference Model When Y (GDP) increases, C (Consumption) increases, people need more money. People consumes more, they demand more money. The money demand curve shifts right, bringing the interest rate (r1) up to (r2) Ms = money supply Md = money demand r = cost of borrowing We have multiplier effects from (G). We also have t
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