Содержание
- 2. Lecture objectives What is the essence of the Keynesian doctrine? How can economic crises be explained
- 3. John Maynard Keynes (1883-1946) Model explaining causes of crises and suggesting methods of counteracting them. „The
- 4. The Keynesian perspective Aggregate demand as the cause of crises Government intervention as the remedy for
- 5. Model assumptions Two factor analysis: the only types of economic subjects are domestic households and firms
- 6. Circular flow in the model
- 7. The essence of aggregate demand Aggregate demand (AD): sum of expenditures for various goods and services
- 8. Consumption component of AD Two things concerning „C” must be noted: it is directly dependent on
- 9. Marginal propensity to consume Marginal propensity to consume (MPC): the fraction of the additional current income
- 10. Autonomous consumption Autonomous consumption (CA): the part of consumption that is not financed by current income
- 11. Consumption function Notice that MPC and CA are key variables in consumption function formula: 1) MPC
- 12. Technical note Changes in nouseholds’ current income result in shifts along the consumpion line. Changes in
- 13. Saving Saving means unconsumed income. Y = C + S C = MPC×Y + CA S
- 14. Saving function Notice that saving function is the mirror reflection of the consumption function formula: 1)
- 15. Investment component of AD Special status in the Keynesian doctrine Outstanding variability Independent of the current
- 16. Investment function
- 17. Aggregate demand: recollection Aggregate demand: the sum of households’ and firms’ expenditures (for consumption and investments,
- 18. Aggregate demand function
- 19. 45 degrees line At any point on the 45° line the distance to the horizontal axis
- 20. Check point: the meaning of „Y” So far the letter „Y” was using to denote „income”.
- 21. Keynesian cross Plotting AD and 45 degrees lines on the same chart allows you to study
- 22. Equilibrium & equilibrium output Equilibrium output (YE): the level of GDP at which the aggregate demand
- 23. Short-run equilibrium in the market for goods and services
- 24. Equilibrium: numerical example (static analysis) C = 50 + 0,7×Y S = – 50 + 0,3×Y
- 25. Equilibrium: two approaches First approach: AD = Y 450 + 0,7×Y = Y YE = 1500
- 26. Disequilibrium: shortage (insufficient production) STATUS Assume that Y = 1200 Then AD = 450 + 840
- 27. Disequilibrium: surplus (excess production) STATUS Assume that Y = 1800 Then AD = 450 + 1260
- 28. Beware of the misunderstanding! At the short-run disequilibrium: Splanned ≠ Iplanned Sactual = Iactual
- 29. Equilibrium: numerical example (dynamic analysis) Assume that: C = 50 + 0,7×Y I = 400 →
- 30. Investment multiplier Investment multiplier: a measure that informs how many times the change in the equilibrium
- 31. Investment multiplier and economic cycles Higher multiplier >>> more volatile GDP Lower multiplier >>> less volatile
- 32. Check point: true / false test The Keynesian model assumes that the production is basically determined
- 33. Check point: true / false test (cont.) The relation of consumption planned by households to their
- 34. Test your understanding: matching
- 35. Lecture objectives What is the essence of the Keynesian doctrine? How can economic crises be explained
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