Test 3: Chapters 23, 24, 26, 27 Flashcards
1
Q
What happens when the price level changes?
A
When p goes up - w down, a down
When p goes down - w up, a up
2
Q
What is the effect on NX with a price level change?
A
When p goes up - NX down (X down, IM up)
When p goes down - NX up (X up, IM down)
3
Q
What is the effect on AE with a price level change?
A
When p goes up - AE goes down
When p goes down - AE goes up
4
Q
What is the formula for y*?
A
y* = 1/(1-b)(1-t)-m (a + I + G + X -bT0)
5
Q
What is the formula for k?
A
k = 1/1-z
6
Q
What is the formula for z?
A
z = b(1-t)-m
