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a) The publics holdings of money balances;
b) Loans made by banks and other financial institutions, the supply of funds may exceed op fall short of current saving to the end that saving & investment will not be equal.
5. Keyneisian economists discredit price-wage flexibility on both practical and theoretical grounds. They argue that
a) Union and business monopolists, minimum-wage legislation, and a host of related factors have virtually eliminated the possibility of substantial price-wage reductions;
b) Price-wage cuts will lower total income and therefore the demand for labor.
6. The Classical & Keyneisian views can be illustrated thru the AD-AS model. Classical economists envision
a) A vertical AS curve which establishes the level of output;
b) A stable AD curve which establishes the price level ;
Keyneisians see
a) A horizontal AS curve at less-than-full-employment levels of output;
b) Inherenlty unstable AD curve.
7. The basic tools of Key employment theory are the Consumtion (C), Saving (S) and Investment (I) schedules, which show the various amounts that households intend to consume and save and that businesses plan to invest at the various possible income-output levels given a particular price level.
8. The locations of the consumption and Saving schedules are determined by such factors as:
a) The amount of wealth owned by households;
b) The price level;
c) Expectations of future income, future prices and product availability;
d) The relative size of consumer indebtedness;
e) Taxation;
The consumption and saving schedules are relatively stable.
9. The average propensities to consume and save show the proportion of fraction of any level of total income that is consimed and saved. The marginal propensities to consume and save show the proportion of fraction of any change in total income that is consumed or saved.
10. The immediate determinants of investment are:
a) The expected rate of net profit;
b) The real rate of interest
The economy's investment-demand curve can be determined by cumulating investment projrcts and arraying them in descending order according to their expected net profitability and applying the rule that investment will be profitable up to the point at which the real interest rate equals the expected rate of net profit. The investment-demand curve reveals and inverse relationship between th interest rate and the level of aggregate investment.
11. Shifts in the investment-demand curve can occur as the result of chandes in
a) The acquisition, maintenance and operating costs of capital goods;
b) Business taxes;
c) Thechnology;
d) The stocks of capital goods on hand;
e) Expectations.
12. We make the simplifying assumtion that the level of investment determined by the current interest rate and the investment-demand curve doesn't vary with the level of aggregate income.
13. The durability of capital goods, the irregular occurence of major innovations profit vo-latility, and the variability of expectations all contribute to the instability of investment spending.
Equilibrium National output in Keynesian model
1. For a closed no-government economy the equilibrium level of NNP is that at which the aggregate expenditures and national output are equal or graphically where the C + In line intersects the 45-degree line. At any NNP greater than the equilibrium NNP, national output will exceed aggregate spending resulting in unintended investment in inventories, depressed profits and eventual declines in output employment and income. At any below equilibrium NNP the aggregate expenditures will exceed the national output, thereby resulting in unintended disinvestment in inventories, substantial profits and evential increases in NNP.
Fiscal Policy
1. Government responsibility for acheiving and maintaining full employment is set forth in the Employment Act of 1946. The Council Economic Advicers (CEA) was established to advise the President on policies appropriate to fulfiling the goals of the act. The Humphrey-Hawkins Act of 1978 contens specific inflation and unemployment rate objectives.
2. Increases in government spending expand, and decreases contract, the equilibrium NNP. Converserly, increases in taxes reduce, and decreases expand the equilibrium NNP. Ap-propriate fiscal policy therefore calls for increases in government spending and decreases in taxes - that is, for a budget deficit - to correct for unemployment. Decreases in government spending and increases in taxes - that is, a budget surplus - are appropriate fiscal policy for correcting demand-pull inflation.
Реферат опубликован: 12/11/2009