test 4 fiscal policy

Classified in Economy

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Y=C+I+G

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

k= 1/mps

DI= c+s

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.

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