Keynesian Multiplier and Fiscal Policy Effects
Keynesian Multiplier Effect
The idea of compensating changes in private demand with changes in public expenditure rests on the Keynesian Multiplier. An increase in public spending increases domestic production, which also increases agents’ disposable income in the economy. In turn, these revenues are used to finance consumer demand and investment, leading to a further increase in production, which generates more income, and so on. Multiplier:
Conclusion 1: Haavelmo Theorem
An increase in government
Read MoreMarketing Elements: Product, Brand and Pricing Strategies
The Elements of Marketing — The Product
The product
Product is an essential element of marketing, since it is the object through which the company is able to influence the market. The product is everything you want to buy.
You can define a product as a unit or property with a high degree of substitution between them.
Companies seek to create monopolies with their products to differentiate them from other competitors.
Packaging and presentation
The packaging and how to present the product are very important;
Read MoreMarxian Capital Accumulation, Value Theories & Walrasian Equilibrium
Marxian Theory of Capital Accumulation
Karl Marx’s theory of capital accumulation emphasizes the role of exploitation and class struggle in the capitalist system. According to Marx, capital accumulation is driven by the pursuit of profit and the exploitation of labor.
Key elements
- Labor theory of value: Marx’s theory is based on the labor theory of value, which states that the value of a commodity is determined by the socially necessary labor time required to produce it.
- Exploitation: Marx argued that
Oligopoly Pricing, Keynesian Theory, and National Income Metrics
Oligopoly Price Leadership Models
In an Oligopoly, firms are interdependent, meaning one firm’s pricing decision directly affects others. To avoid destructive price wars, firms often adopt a Price Leadership Model, where one firm (the “leader”) sets the price, and others (the “followers”) match it.
Types of Price Leadership
There are three primary forms of price leadership based on how the leader is established:
1. Dominant Firm Price Leadership
- Description: A single firm controls a massive share of
Macroeconomic Equilibrium: IS-LM and WS-PS Analysis
IS-LM Model in a Closed Economy
QUESTION 1:
Consider a closed economy defined by the following equations:
- Consumption (C): 200 + 0.4(Y – T)
- Investment (I): 150 + 0.1Y – 1000(r + x)
- Government Spending (G): 250
- Taxes (T): 100 + 0.2Y
- Real Interest Rate (r): 0.05 (Set by the Central Bank)
- Risk Premium (x): 0.02
Equilibrium Output and the IS Relation
To find the IS relation, we start from the goods market equilibrium condition (Y = Z):
Y = [200 + 0.4(Y – (100 + 0.2Y))] + [150 + 0.1Y – 1000(r + x)] + 250
- Calculating
Food Economics: Demand, Supply, Elasticity & Population
Lecture 7: Demand, Supply, Elasticity
Lectures:
Lecture 7: Economic frameworks to study the world food problem — demand, supply, and elasticity.
Demand Curve
The demand curve follows the Law of Demand: as price falls, quantity demanded rises, producing a downward slope. This occurs because of:
- Diminishing marginal utility — less satisfaction from extra units;
- Heterogeneity in demand — different people have different willingness to pay.
The entire demand curve can shift based on changes in consumer
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