ECN 202 Study Guide - Final Guide: Fiscal Multiplier, Aggregate Demand, Fiscal Year
Document Summary
General strategy: review the textbook chapters, attempt practice problems in the textbook online, where you will get feedback on your responses. Think also about how questions about the real world could involve these models. Aggregate demand: ad= c [household consumption] + i [investment expenditure - firms and households] + g [govt expenditure] + nx [net exports x-m] Is an economic measurement of the sum of all final goods and services produced in an economy, expressed as the total amount of money exchanged for those goods and services. Aggregate consumption: [no government, so no taxes(t)] C1= marginal propensity to consume the change in c as y changes. Simple model of an economy with two sectors: Two parts of aggregate consumption [c] expenditure: C = c 0 + c1 [portion of income spent on consumption] x y. Is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation"s economy.
