ECO 200 Lecture Notes - Lecture 5: Parsec, Inverse Function, Interest Rate
Document Summary
Keynes or aggregate expenditure model or demand side economics chapters 10,11,13. Price and wage cuts in enough markets would reduce income and the den anrl for goods and services. Lower interest rates may not increase investment if"there we negative exoectations, Prices & wages may be sticky,inflexible downward due :0 umms mmopoly and or worker resustance. The market adjustment may take too long . In the long run aye. are all (lead. The amount of goods and services and therefore the level ot employment depend dll"ectw 0 the level of aggregate expenditures or total spending. Ae = aggregate or total expenditures or total planned spending. C is consumption, i is planned investment, 6 is government spending, xn is net exports. (the l in gdp is planned and unplanned investment) . Mpc = change in c / change in di. Apc = c/ di or average propensity to consume. Mp5 = marginal propensity to save = 1- mpc.
