TOPIC 7: What Determines the Level of Aggregate Economic Activity
- Sexton, Section13.1 and Appendix 14
- The Wall Street Journal
- Sexton, Sections13.2-13.6
- John Berry, “Two Theories of Consumer Economics”, Washington Post (on reserve)
- Schultze, Memorandum 3
STUDY QUESTIONS FOR TOPIC 9:
- What determines GDP?
- What is the relation between actual and potential GDP?
- What determines each?
- What are the components of total planned expenditure?
- What is consumption expenditure? What are its determinants?
- What is the marginal propensity to consume?
- What is investment (expenditure)? What are its determinants?
- What is net export expenditure? What are its determinants?
- What is macro equilibrium? How does one show it graphically?