TAILIEUCHUNG - Lecture Principles of economics - Chapter 22: Spending, output, and fiscal policy

This chapter develops the basic Keynesian model of short-run fluctuations. Specifically, the Keynesian model is developed in graphical and numerical forms, with an algebraic derivation provided in the appendix. Fiscal policy is also discussed in the last two sections of the chapter. | Spending, Output, and Fiscal Policy Chapter 22 McGraw-Hill/Irwin Copyright © 2015 by McGraw-Hill Education (Asia). All rights reserved. Learning Objectives Identify the key assumptions of the basic Keynesian model and explain how this affects the production decisions made by firms Discuss the determinations of planned investment and aggregate consumption spending and how these concepts are used to develop a model of planned aggregate expenditure Analyze, using graphs, how an economy reaches short-run equilibrium in the basic Keynesian model Show how a change in planned aggregate expenditure can cause a change in short-run equilibrium output and how this is related to the income-expenditure multiplier 5. Explain why the basic Keynesian model suggests that fiscal policy is useful as a stabilization policy, and discuss the qualifications that arise in applying fiscal policy in real-world situations Recessionary Gap Great Depression Available resources are unemployed Public’s willingness

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• Principles of economics
• Lecture Principles of economics
• Market imperfections
• The international economy
• Fiscal policy
• Short run equilibrium
• Ten principles of economics
• People face tradeoffs
• Opportunity cost
• Marginal changes
• Economics of information
• Consumer choice
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• Demand curve
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• Short run economic fluctuations
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• Stabilize the economy
• Monetary policy