Macroeconomic Theory: Dynamic General Equilibrium Approach - Essay Example

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From the paper "Macroeconomic Theory: Dynamic General Equilibrium Approach" it is clear that the consumption level is at $ 4450 while the actual production level is $3800. We expect the actual production to be equal to the consumption level. This means that more is consumed than that produced…

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Macroeconomic Theory: Dynamic General Equilibrium Approach

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Subject: Macro & Microeconomics
Type: Essay
Level: Ph.D.
Pages: 1 (250 words)
Downloads: 2
Author: alexandrine22

Extract of sample "Macroeconomic Theory: Dynamic General Equilibrium Approach"

Using a well-labeled diagram means that the equilibrium is lowered.
In a closed economy, there is neither a government nor foreign sector, combined expenditures are equal to consumption expenditures plus designed gross venture expenditures. The equilibrium production of such a country is the level of output at which the sum amount of expenditure is equal to the amount produced, or GDP. That is equilibrium GDP = C + I¬g.
To go back to the original equilibrium, the level of production has to be increased so as to shift the IS curve downwards to IS1. Read More

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