Y=Co +\- @(Y-To) + Io + Go and/or +Xn
Y=Co+\- 1/@ - @To+Io+Go and/or + Xn
Y - 1/@ = Co - @To +Io + Go and/or + Xn
Y(1-@) = Co - @To + Io + Go and/or + Xn
Y=Co - @To + Io + Go and/or + Xn
1 - @
C= Co + 1/@*d --- taxes
= Co + @ (y-Io) --- no taxes
yd= y- To
K = 1/1-mpc
APC = C/DI
APS = S/DI
MPC = 1 / 1-@
MPS = 1 / @
Multiplier = 1 / 1-mpc or 1/mps
xn = x-m
Ca = C +/- mpc * tx
Sa = S +/- mps * tx
Aggregate Demand - Total value of real aggregate output that both sectors of the economy are willing to purchase at some AVG price.
AD = L(p)
Investment rates, future business expectations, Technology, Degree of excess capacity, Business Taxes
Aggreagate Supply- Total value of real Aggregate output that will be made available at some AVG price.
Domestic Prices, Import Prices, Market Share
Fiscal Policy - Changes in taxes and/or spending that are the result of concious changes in government policy.
discretionary - policy that requires government action
non discretionary - built in stabilizers...No govt action required
Expansionary Fiscal Policy - an increase in govt. Spending and/or a decrease in taxes aimed at increasing output and income.
Contractionary - a decrease in govt spending and/or an increase in taxes aimed at decreasing output and income.