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Macro 18

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Gale Pooley
Gale Pooley

Macro 18

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Lecture 18 Macroeconomics
Opening Prayer
Quiz Master
Exam 2 Extra Points Friday Testing Center
Why would you want government to go into debt? Don’t have to pay Future larger
Debt Investment Only if the return is higher than the interest rate
Chapter 18 Fiscal Policy
P4 Price Level Real GDP or Y Fiscal Policy and Negative Supply Shock 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 P2 P3 Inflation and Recession Stagflation
P Price Level Real GDP or Y Increase Aggregate Demand Lower Taxes and/or Increase Spending 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 Unemployment
P3 Price Level Real GDP or Y Decrease Aggregate Demand Raise Taxes and/or Decrease Spending 18 Long Run Aggregate Supply Short Run Aggregate Supply 19 P1 Aggregate Demand 17 Inflation
Where does government get money? Crowding Out
More Taxes Cancel No effect
More Borrowing Crowding Out Increase interest rates
Lower Taxes People may just save more and not spend
More Spending Now get free stuff. No new spending
Get a free iPhone But your taxes will go up to pay for it No change in total spending
Where does government get the money?
GDP = C + I + G + X - M
If there are inactive capitals Output will increase If all capitals are active Prices will increase

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