Keynesian Model: Business & Government Spending

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4 Terms

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Business Spending

IR = I + Iu

  • I = desired investment — determined by interest rates

  • e.g. — I = 25

<p>IR = I + Iu</p><ul><li><p>I = desired investment — determined by interest rates</p></li><li><p>e.g. — I = 25</p></li></ul><p></p>
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Government Spending

  • not related to income

  • e.g. — G = $75

<ul><li><p>not related to income</p></li><li><p>e.g. — G = $75</p></li></ul><p></p>
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Overall Model

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