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AP MACRO: Spending multipliers
 

AP MACRO: Spending multipliers

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Thursday February 16, 2012

Thursday February 16, 2012

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    AP MACRO: Spending multipliers AP MACRO: Spending multipliers Presentation Transcript

    • 1. If a person’s MPC is .9, which is true: A. They spend more than they earn? B. If they get a raise they will spend about 90% of it C. If they get a raise they will save 90% of it D. This person spends an average of 90% of their income What is the APC formula? 2.Atlast, Kleinhas updated 3. Why is APC the inverse of APS? 4. What are “sticky wages”? my picture OK Keynes, lets test your theories
    •  US GDP only growing at 2.8 %  Congress wants to boost SRAD and GDP  Which policy would increase AD by the largest amount? Policy A: lower income tax rates by 5 % Policy B: Increase spending by 5 % (ask Fed to increase money supply by 5% to offset deficit) Policy C: Obama’s plan
    •  Government spending actually can increase SRAD by more than spending Fiscal Multiplier = 1 / (1 – MPC) Trade off? Stossel clip
    •  Largereffect in SR? LR problem?
    •  Poster explaining active Keynesian stabilization policies pages 773-778 • Pictures, maybe a graph, explanation of stabilizers, multiplier effect Mankiw, Ch34 Problems: 4, 5, 7, 9, 10, 13 Find4 + bloggers discussing fiscal spending, cite the source and evaluate their ideas (what is their view of the spending multiplier, agree/disagree & why). (Mises.org, planet money, lewrockwell.com, marginal revolution, Mankiw, Krugman, WSJ, Café Hayek)