QMS 102 Study Guide - Final Guide: Consumption Function, Prime Rate, Autarky

• School: Ryerson University
• Department: Quantitative Methods
• Course: QMS 102
• Professor: Amy Peng

Document Summary

The following list is a summary from each lecture regarding the most difficult content/material. If you have any questions, please feel free to ask me. Lecture 5 and lecture 6 (up to slide #18) Investment demand and real interest rate is negatively related. Multiplier = change in equilibrium output/change in autonomous expenditure: multiplier = ye/ ae. Note: review questions on slide 17 and 18. Mc questions posted on blackboard under connect quizzes. Lecture 7 is built on lecture 5 and 6. By adding the government sector, we add government spending (g) and taxes (t) into the ae equation: adding government spending (g) is easy. G is an autonomous term, ae = c + i + g, G shift ae up and increases equilibrium gdp: adding tax (t) is tricky. Tax doesn"t affect ae directly, taxes reduces disposable income and affect consumption function.