ECON 211 Lecture Notes - Lecture 4: Government Spending, Aggregate Demand
Document Summary
Shifting of the curve is the same as the supply and demand of individual curves. Consumer (c): consumer wealth, expectations, household indebtedness, taxes. Investment(i): interest rates, expected returns (expected business conditions, technology, degree of excess capacity, business taxes) Expected returns: expectations about future business conditions, technology, degree of excess capacity, business taxes. Government spending increases: aggregate demand increases (as long as interest rates and tax rates do not change, more transportation projects. Government spending decreases: aggregate demand decreases. National income abroad: country"s wealth, economic health of a country: measured by gdps of other countries though not nearly that simple in reality. Exchange rates: one country"s currency value against another: dollar depreciation: fall in value of the dollar relative to foreign currency (weak $) Imports fall; exports rise => net exports increase: dollar appreciation: rise in value of the dollar relative to foreign currency (strong $) Imports increase; exports fall => net exports decrease.
