![Page 1: Chapter 9 – Keynesian Model in Action The Aggregate Expenditures-Output … 9 - Keynesian Model in... · 2016-03-24 · Chapter 9 – Keynesian Model in Action ... assumed to be](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b5565e57f8b9ad9688b48b2/html5/thumbnails/1.jpg)
1 Chapter 9 – Keynesian Model in Action What is the purpose of the chapter? - ___________________________________________________________________ Why is government spending (G) an autonomous expenditure? ______________________________________________ __________________________________________________________________________________________________ Why is net exports (X-M) assumed to be negative? _________________________________________________________ The Aggregate Expenditures-Output Model In the Keynesian Model, where is the equilibrium level of GDP? ______________________________________________ __________________________________________________________________________________________________ What does Real GDP mean? _____________________________________________________________ What does aggregate expenditures mean? _______________________________________________________________ How do aggregate expenditures affect the economy? ______________________________________________________ __________________________________________________________________________________________________
![Page 2: Chapter 9 – Keynesian Model in Action The Aggregate Expenditures-Output … 9 - Keynesian Model in... · 2016-03-24 · Chapter 9 – Keynesian Model in Action ... assumed to be](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b5565e57f8b9ad9688b48b2/html5/thumbnails/2.jpg)
2 Analysis of Keynesian Equilibrium
What causes a decrease in real GDP and employment? Why? ________________________________________________
__________________________________________________________________________________________________
What causes an increase in GDP and employment? Why? ___________________________________________________
__________________________________________________________________________________________________
What is the aggregate expenditures-output model? ________________________________________________________
__________________________________________________________________________________________________
How can the macroeconomic goal of full employment be reached on the graph?
___________________________________________
___________________________________________
___________________________________________
![Page 3: Chapter 9 – Keynesian Model in Action The Aggregate Expenditures-Output … 9 - Keynesian Model in... · 2016-03-24 · Chapter 9 – Keynesian Model in Action ... assumed to be](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b5565e57f8b9ad9688b48b2/html5/thumbnails/3.jpg)
3 Spending Multiplier Effect
What is the Keynesian multiplier? ______________________________________________________________________
How does it work? __________________________________________________________________________________
What is the MPC? ___________________________________________________________________________________
What is the MPS? ___________________________________________________________________________________
What is the formula for the multiplier? __________________________________________________________________
Recessionary and Inflationary Gaps
What is the GDP gap? ________________________________________________________________________________
What is the recessionary gap? ____________________
_____________________________________________
_____________________________________________
What is the Keynesian remedy for a recessionary gap?
_____________________________________________
_____________________________________________
What can the gov’t do to close the recessionary gap?
_____________________________________________
_____________________________________________
![Page 4: Chapter 9 – Keynesian Model in Action The Aggregate Expenditures-Output … 9 - Keynesian Model in... · 2016-03-24 · Chapter 9 – Keynesian Model in Action ... assumed to be](https://reader031.vdocuments.site/reader031/viewer/2022022602/5b5565e57f8b9ad9688b48b2/html5/thumbnails/4.jpg)
4
What is the inflationary gap? ____________________
____________________________________________
What is the Keynesian remedy for an inflationary gap?
____________________________________________
____________________________________________
What can the gov’t do to close an inflationary gap?
____________________________________________
____________________________________________
What is the tax multiplier? ___________________________________________________________
What is the formula to determine the tax multiplier? ______________________________________________