ECO102 Lecture 06
ECO102 - Week 06.pdf
- change indirect tax to make
- Test review
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- Calculate and
- In ECO102 Tutorial 05 we did to offset the shock
- Here we to offset the shock.
- It's a decrease in AE.
- Since is affected by as well as . We need
- Now
- Then graph it like normal.
- 8
- Vertical intercepts of and are 30.
- When tax rates change, it changes the slope, not the intercept.
- 9
- This is the same as the question above.
- Shortcut:
- Make .
- If
- Sub in
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- Sub it in to Fake
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- Explain why requires that
- This is because of spending multipliers.
- The reduces .
- A , then .
- That's why is needed to offset the shock.
- What if we to get
- When we increase the indirect taxes, we need to increase by to get
- #tk is this correct?
- Draw graphs for those curves above.
- Solow growth model
- Potential GDP as
- #tk yt econ curtis
- LAS
- Long-run aggregate supply
- Crossing of and at
- Crossing of and at
- But we shoot over from at
- Long-run aggregate supply is vertical at
- At , we have GDP above potential, which is not sustainable. Expansionary gap.
- As , the curve shifts up, and we end up at again, but with a higher price level.
- Solow model and LAS is on test 2 #tk
- Then we will look at impact of exchange rates.
- A policy to balance the trade account
- We just change the exchange rate to balance the trade account.
- If the exchange rate depreciates, then , which increases .
- Shortcut from before:
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- ?
- #tk prof got
- Goal is
- Sub into to create a fake curve
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- to balance the trade account.
- Graph with original, then then
- As ,
- As ,
- or or as a policy tools have the same effect on , but different effects on and .
- Eliminate consumer deficit.
- Canadians are likelier to be savers
- US are likelier to be borrowers
- In the early 2000s, canadians acted more like americans, and had a consumer deficit.
- #tk never been on exam before, but still good to know.
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- #tk flashcard of the above
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- Net borrowing.
- To solve this.
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- We need to increase by to get .
- , means to eliminate consumer deficit.
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- Graph with
- Graph with
- Graph with
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- When , it doesn't affect
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- Graph with
- Again,
- What if to make
- How much would they need to cut taxes by?
- to get
- Since taxes are multiplied.
- So