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Lecture 67

ECON 1020 Lecture 67: Lecture 67
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Department
Economics
Course
ECON 1020
Professor
Ryan A.Compton
Semester
Summer

Description
o78P Net exports o X = Xa o Exports does not depend on income o M = mY (where m = marginal propensity to import) o Imports depend on income Government expenditures o G = Ga Government spending does not depend on income Equilibrium Requires Y = AE o So set Y = AE and solve for Y Example: C = 60 + 0.6Y T = 40 + 0.25Y I = 60 G = 70 X = 44 M = 0.15 Y Y = 300 AE= 60 + 0.6(300 40 0.25(300)) + 60 + 70 + 44 0.15(300) AE = 234+ 0.6(300 40 0.25(300)) 0.15 (300) AE = 234 +0.6 (185) 45 AE = 234 + 111 45 AE = 300
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