This document introduces the equilibrium model in macroeconomics. It defines the equilibrium model as one where aggregate supply equals aggregate demand. It explains that the equilibrium model is solved by substituting equations into the aggregate demand function, setting it equal to output to find the equilibrium level, and simplifying. As an example, it presents a simple model where the equilibrium condition is that government spending plus transfers minus taxes must equal savings minus investment minus net exports. It then discusses implications like crowding out, Ricardian equivalence, and twin deficits that can result from changes in the government budget deficit in the model.
The partnership was formed by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers, who had become acquainted while working in a Portland, Oregon, restaurant. On November 1, 2009, each of the three partners contributed $16,000 cash to the partnership and agreed to share in the profits proportionally to their contributed capital (i.e., one-third each). The Antoine's’ contribution represented practically all of their saving. Mrs. Landers’ payment was the proceeds of her late husband’s insurance policy.
Mortein Vaporizer: What lies beneath Brand Positioning?
Debasis Pradhan and Divya Agrawal
Hari Panda, the brand manager of Mortein Vaporizer, could not keep his
Burroughs Wellcome - Retrovir Case Analysis (Idia Ogala - Lubin School of Bus...Idia Ogala
Analyzing the Burroughs Wellcome, Retrovir Case Study for my Pace University (Lubin School) Advanced Marketing Capstone Course.
Equipped with alternatives (with in-depth explanations), a viable recommendation, income statements w/ financial projections for each option, and next steps.
Contact me, for further case feedback, at idia.ogala@gmail.com
The partnership was formed by Mr. and Mrs. Henry Antoine and Mrs. Sandra Landers, who had become acquainted while working in a Portland, Oregon, restaurant. On November 1, 2009, each of the three partners contributed $16,000 cash to the partnership and agreed to share in the profits proportionally to their contributed capital (i.e., one-third each). The Antoine's’ contribution represented practically all of their saving. Mrs. Landers’ payment was the proceeds of her late husband’s insurance policy.
Mortein Vaporizer: What lies beneath Brand Positioning?
Debasis Pradhan and Divya Agrawal
Hari Panda, the brand manager of Mortein Vaporizer, could not keep his
Burroughs Wellcome - Retrovir Case Analysis (Idia Ogala - Lubin School of Bus...Idia Ogala
Analyzing the Burroughs Wellcome, Retrovir Case Study for my Pace University (Lubin School) Advanced Marketing Capstone Course.
Equipped with alternatives (with in-depth explanations), a viable recommendation, income statements w/ financial projections for each option, and next steps.
Contact me, for further case feedback, at idia.ogala@gmail.com
Criteria Mark 1. Professional Presentation 1 · Well organiz.docxfaithxdunce63732
Criteria / Mark
1. Professional Presentation/ 1
· Well organized, neatly presented, word processed, spelling, grammar, and punctuation
· Name and student number as well as lab partner/s name, date and time of experiment
· In-text referencing, reference list at end of report
2. Title and Abstract/ 1
· Title: concise title directly above abstract (even if you have it on the cover page already)
· Abstract: Brief description of the experiment, the major results, associated uncertainties, comparison with theoretical results/expected results.
3. Introduction and Aims/ 1
· A brief paragraph describing key physics and relevant background
· At the end of the introduction, state the aims of experiment
4. Procedure and Apparatus/ 0.5
· Describe the equipment used, you may include labeled sketches, drawing, or photographs of apparatus
· Describe how you conducted the experiment. Remember to use past tense, you are telling the reader what you have done.
5. Risk Assessment/ 0.5
· Use a risk assessment matrix (under lab section of Blackboard) to:
(i) Consider the health and safety risk of this experiment to yourself and others in the laboratory.
(ii) Determine what measures you would put in place to mitigate/reduce these risks where possible.
· Attach the risk assessment at the end of your report after the references list
6. Data, Critical Analysis and Uncertainties / 2
· Data presented in numbered table format with proper titles and headings ie. “Table 1: Description of Some Tabulated Data”
· Figures to presented with number headings and with proper titles and headings ie. “Figure 1: Graph of some Data”
· You should write text which refers to/describes data in tables and plots
· Show calculations of key parameters and calculations of uncertainties where necessary
· Present data in scientific notation where applicable
· Use appropriate SI units – eg. metres (m), seconds (s), metres per second (m/s).
7. Summary and Discussions /2
· Brief summary the experiment and aims
· Describe the results and put them in context with the expected or theoretical values – do they match? If not, why? You may need to do some research for this part.
· Identify the major source(s) of uncertainty and how they contribute to the final uncertainty
· Statements describing ways to improve the precision and/or accuracy of the final result by improving the method employed as well as considering alternative equipment
· Unnecessary repetition of method or results will not be considered as discussion
8. Answers to specific questions /2
MOD001072
MANAGING THE ECONOMY
Weeks 7-8
Classical model- small open economy
*
Weeks 7-12
The three topics
WKS 7-8
CLASSICAL MODEL‘Long run’ –flexible pricesOpen economy
WKS 9-10
IS-LM [‘Keynesian’] MODEL‘Short run’ – fixed pricesOpen economy
WKS 11-12
INFLATIONARY EXPECTATIONSAdaptive expectationsRational expectations
HOLIDAY BREAK
*
WEEKS 7-8 SUMMARY
CLASSICAL MODEL0. Classical models –basic features, closed v.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
2. Intermediate Macroeconomics
Introduction to the Equilibrium Model
1. The Parsimonious Model
2. What is an Equilibrium Model?
3. Equilibrium Model Solution
Method
4. Simple Equilibrium Model in Action
3. Intermediate Macroeconomics
1. The Parsimonious Model
Make simplifying assumptions
Parsimonious – stingy, miserly
Occam’s Razor - eliminate complicating
details that don’t significantly contribute to
the model
• Don’t include unimportant variables
• Ceteris Paribus (other things being equal) -
Hold constant variables that are not the
focus of your interest
4. Intermediate Macroeconomics
1. The Parsimonious Model
Simplifying assumptions for our models
Aggregate output ≡ National income
National income ≡ Personal income
5. Intermediate Macroeconomics
2. What is an Equilibrium Model?
Assumed equilibrium condition
• GDP Accounting (Chapter 2):
National Income ≈ Aggregate Supply
• Macroeconomic Models:
Aggregate Supply (AS) = Aggregate Demand (AD)
or
National Income (Y) = Aggregate Demand (AD)
6. Intermediate Macroeconomics
2. What is an Equilibrium Model?
Disequilibrium
• Disequilibrium: aggregate output (or
national income) is not equal to aggregate
demand
• Undesired Inventory Accumulation: a
symptom of disequilibrium where
aggregate output > aggregate demand
• Undesired Inventory Draw: a symptom
of disequilibrium where
aggregate output < aggregate demand
7. Intermediate Macroeconomics
3. Equilibrium Model Solution Method
1. Substitute the given equations into the
equation for aggregate demand AD.
2. Apply the assumed equilibrium condition:
Y = AD
3. Substitute the derived equation for AD
from step 1 into the right-hand side of the
equilibrium condition in step 2.
4. Simplify the equation. This often means
solving for income (Y), since Y should
appear on both the left- and right-hand
sides of the equation in step 3.
8. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Describing the economy
AD = C + I + G + NX
AD = aggregate demand
C = consumption
I = investment
D = government spending
NX = net exports (exports – imports)
YD = C + S
YD = disposable income
S = savings
YD = Y + TR – TA
Y = national income
TR = government transfer payments
TA = government taxes
9. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Solving the model
1. Substitute given equations into equation for AD:
YD = YD
C + S = Y + TR – TA
C = Y + TR – TA - S
AD = C + I + G + NX
= (Y + TR - TA - S) + I + G + NX
2. Apply equilibrium condition:
Y = AD
3. Substitute solution for AD from Step 1:
Y = Y + TR - TA - S + I + G + NX
4. Simplify equation:
G + TR - TA = S - I - NX
10. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Implications of the model
In equilibrium:
G + TR - TA = S - I - NX
• Crowding Out
• Ricardian Equivalence
• Twin Deficits
11. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Crowding Out
In equilibrium: G + TR - TA = S - I - NX
Assume:
– Increase in government deficit (G + TR - TA)
– Savings (S) and net exports (NX) constant
Result:
– Decrease in investment (I)
12. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Ricardian Equivalence
In equilibrium: G + TR - TA = S - I - NX
Assume:
– Increase in government deficit (G + TR - TA)
– Investment (I) and net exports (NX) constant
Result:
– Increase in savings (S)
13. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Twin Deficits
In equilibrium: G + TR - TA = S - I - NX
Assume:
– Increase in government deficit (G + TR - TA)
– Savings (S) and investment (I) constant
Result:
– Decrease in net exports (NX)
14. Intermediate Macroeconomics
4. Simple Equilibrium Model in Action
Implications of the model
Savings Investment
Net
Exports
Ricardian
Equivalence
Increase
Assume
Constant
Assume
Constant
Crowding Out
Assume
Constant
Decrease
Assume
Constant
Twin Deficits
Assume
Constant
Assume
Constant
Decrease
G + TR - TA = S - I - NX
Implications of an increase in the Government
Budget Deficit, G + TR - TA:
Editor's Notes
What makes a good model?
It can explain historical outcomes
It makes reasonable predictions of the future
There is no such thing as an absolute truth. A theory is accepted only so far as it has not been disproved.
Many economies of the world still don’t understand much less accept free markets and supply/demand theory.
1. Aggregate output = national income.
- gross domestic product is equal to national income. Specifically, we ignore the difference between GNP and GDP. While this is a relatively safe assumption for the U.S. economy because of the historically small difference between the two, it may be more significant for other economies that are more dependent on foreign investment or residents working abroad.
- ignore depreciation. While depreciation is a significant variable in long-run growth models, in our short-run equilibrium models we are more interested in total spending (i.e., gross investment rather than net investment).
- indrect business taxes (e.g., sales, excise, and property taxes) are a component of National Income. This treats indirect business taxes the same way as income tax. An income is received for a good or service and a sales and/or income tax is then paid to the government. This assumption is of no consequence to our models.
2. National Income = Personal Income.
- humanizing corporations. Corporations are collections of shareholders and the actions of corporations represent the income and expenditures of individuals. Again, we are interest in total spending or income and are unconcerned what bank accounts the money flows out of or into.
With these two assumptions we can refer to aggregate output and total income interchangeably.
Equilibrium is defined as a state of balance. In economics, equilibrium represents the condition in which each individual agent (persons and firms) is doing the best it can for itself (maximizing utility or profits) given the actions of all other agents in the economy and the institutional constraints on behavior. In a microeconomic equilibrium no individual has an incentive to change his or her behavior. In a macroeconomy, where the actions of all individuals are added up, the aggregate outcomes are also presumed to be stable in an equilibrium.Note that our equilibrium condition is an assumed one. This is what makes a theory rather than a simple accounting identity.
We can give a simplified story of what happens to return an economy to equilibrium. When aggregate output is greater than aggregate demand there is more being produced in an economy than is being consumed. Supply is greater than demand. Unsold production starts to accumulate. Firms respond by cutting prices to stimulate demand. Lower prices also means that firms will produce less. Aggregate output declines and aggregate demand rises until the desired level of inventory is attained and equilibrium is restored.
When aggregate output is less than aggregate demand the opposite happens. Supply is less than demand and inventories decline below the desired level. This is a signal for firms to raise prices. With higher prices aggregate output increases and aggregate demand declines until the economy returns to equilibrium.
The typical short-run macroeconomic model in this course represents an economy that is defined by one or more equations. The individual equations must be solved simultaneously. For our purposes that usually means creating a single equation by combining the individual equations and applying the required macroeconomic equilibrium condition (Y = AD), where Y is national income and AD represents aggregate demand.
While this method is convenient for solving the small models that we will present in this course it&apos;s not the best method. A better approach is to use matrix algebra but teaching this mathematical technique is beyond the scope of this course. In practice you would let a computer program solve a set of simultaneous equations for you. For the computer program to be able to come up with a proper solution the equations must be properly specified. We hope this course will show you how the equations should be defined, how they interact, and what solutions you should be looking for.
Our first equilibrium model is of a public open economy. A &quot;public&quot; economy is one in which the government sector is modelled. The government sector includes government spending, taxes, and transfer payments (e.g., social security). Some macroeconomic models are of closed economies in which the government is ignored. A model of a closed economy is appropriate in a parsimonious model in which the implications of the model are not significantly affected by government spending, taxes, or deficits. In our simple model below we are particularly interested in seeing how government deficits affect consumption and investment spending and the balance of foreign trade.
Our model is also an &quot;open&quot; economy. An open economy includes foreign trade, i.e., the balance between imports and exports of goods and services. Some macroeconomic models are of closed economies where the balance of trade does not significantly affect the analysis. But we are interested in the trade balance and if government deficits can contribute to a country importing more than in exports.
The simplified equation probably was not intuitively obvious to you. You would have to know beforehand that our objective in this model is to look at the government budget balance (G + TR - TA) and see how it affects savings, investment, and net exports. How does an increase or decrease in the governments budget deficit affect the economy?
Government borrows money to finance the deficit. Government borrowing reduces money available for investment. Government spending crowds out investment. We could quantify this crowding out effect by adding the interest rate to our model. Government borrowing would increase the interest rate, which would reduce planned investment spending. This would complicate our model but not change the general relationships between macroeconomic variables that we are trying to identify.
Ricardian equivalence, named after the 19th century economist David Ricardo, suggests that households and firms are forward looking. Economic agents base their current spending not only on current income but also future expected income. A government budget deficit today means higher taxes in the future to pay off the debt. Current savings increase in the expectation they will be needed to pay the future increase in taxes.
If the government deficit increases through more government spending, the increase in government spending represents an increase in income to households. Households save the income increase because they expect higher future taxes to reduce the deficit. If the government deficit increases because of a tax cut, households again put the extra income in the bank to cover the future tax increase to pay off the deficit.
What actually happens is probably a little bit of both and something more. Consumers may not expect the government to pay off the accumulated debt, at least not soon. Then the increase in government spending or cut in taxes would lead to a real increase in national income and aggregate demand in the short term. We can enjoy the windfall today and let the next generation(s) deal with the consequences.
The foreign trade balance introduces a new means of financing a government deficit. The government can borrow money from other countries. But sooner or later those countries will want those dollars back. The implicit (unstated) assumption here is that there is an international equilibrium in the demand for dollars. What we will see is that the dollars the government borrows will be replaced by dollars spent by U.S. residents on foreign goods.
Assume the government borrows money to finance a deficit. Since U.S. savings (S) and investment (I) is fixed, the government borrows money from foreign countries. The foreign countries now have less U.S. currency than they did before the government initially borrowed money. The foreign currency exchange rate adjusts so that it is now cheaper for U.S. residents to purchase foreign goods and imports increase, returning the U.S. currency to foreign shores. As the government deficit increases so does the foreign trade deficit (i.e., we import more than we export). We now have twin deficits in the government budget and foreign trade.
The twin deficits was particularly relevant during the 1980s. Early in the decade, the U.S. government budget deficit increased because of higher defense spending and tax cuts. Private saving and investment did not change very much. Consequently, our negative foreign trade balance grew significantly.
While we have presented the impacts of government deficits on savings, investment and the trade balance separately, in reality we get some of each. All three macroeconomic variable adjust to accommodate the government deficit. Now you know why economists dislike government budget deficits.
With our simple model all we can really do is indicate the possible relationships between macroeconomic variables without specifying the magnitudes. Do we get a lot of one (e.g., crowding out) and a little of the others (e.g., Ricardian equivalence and twin deficits) or something else. We can begin to consider the question of magnitudes by introducing behavioral equations that define the desires or intentions of economic agents. For example, one behavioral equation is the relationship between interest rates and investment. As we introduce behavioral equations later on in this course we can attempt to identify how the economy will react.