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ECO102 Lecture 04

ECO102 Lecture 04 Raw

• Scope

  • Topic: Open-economy-with-government Keynesian cross applications (taxes, monetary policy via $r\to I$, saving, net exports, stabilization, policy targets).

• Atomic Notes (this Lecture)

  • Proportional Taxes Flatten AE (Keynesian Cross)
  • Government Budget Balance Line B(Y) and Tax Rate
  • Monetary Policy in Keynesian Cross (r→I) + BoC Overnight Rate Target
  • Private Saving Function S(Y)=Y_D−C (Evaluation at Equilibrium)
  • Paradox of Thrift (Keynesian Cross)
  • Foreign Shock + Fiscal Stabilization (NX↓, G↑)
  • Policy Targets via Substitution (“Fake AE”) for Budget Balance
  • Balanced-Budget Change (ΔG=ΔT) Intuition
  • ECO102 Lecture 04 Practice Questions

• Source Reminders

  • Bank of Canada: monetary policy implemented by adjusting the target for the overnight rate. [page:0]
  • Keep graph set consistent across problems: $AE$-cross, $B(Y)$, $NX(Y)$, $S(Y)$.

• Flashcards

  • ECO102 Lecture 04 Flashcards