Chapter 4.Pptx

01 Giới thiệu về lập trình Python và các công cụ lập trình ntdat qnuslide MACROECONOMICS Lecturer MSc Nguyen Thi Thuy Dung Chapter 4 Aggregate Demand and Fiscal Policy • Analyzing factors of AD • Buil[.]

MACROECONOMICS Lecturer: MSc Nguyen Thi Thuy Dung Chapter 4: Aggregate Demand and Fiscal Policy • Analyzing factors of AD • Building up AE (Aggregate Expenditure) • Identifying Equilibrium output • Government budget • Fiscal policy Analyzing factors of AD I Factors of AD • Assumption: Consider the economy in the short run • The economy has a lot of unused resources -> Aggregate supply ready to meet all demand, the short-run AS curve is horizontal at a given price Po • Aggregate demand determines the level of output in the economy AD-AS model P AD2 AD1 AS Po Y1 Y2 Y C – Consumption function • The consumption function reflects the level of expenditure of households corresponding to each level of income: • C = C0+ MPCxYd Where: - C0: autonomous consumption (i.e the level of consumption when Yd = 0) (Co >0) - Yd: disposable income (Yd=Y-T) - MPC: the marginal propensity to consume (0 < MPC < 1) Yd -disposable income  Disposable income is the final amount of income that households can use to spend  Yd = Y –T  Y: total output  T: Personal tax income MPC – Marginal Propensity to Consume • MPC= ΔC/ΔYd (0