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Fiscal and Monetary Policy (Fiscal Policy and Aggregate Demand (The…
Fiscal and Monetary Policy
Monetary Policy and Aggregate Demand
The theory of Liquidity Preference
Money supply
Changing the reserve requirements
Changing the discount rate
Open-Market Operations
Money Demand
Equilibrium in the Money market
Q of money supplied = Q of money demanded
Interest rate
Nominal interest rate
Real interest rate
The Downward Slope of the AD curve
Changes in the Money Supply
Shift the AD curve
Fiscal Policy and Aggregate Demand
The Multiplier Effect
Marginal Propensity to Consumers (MPC)
Multiplier = 1/(1-MPC)
Fiscal policy
Expansionary
Shift AD to right
Contractionary
Shift AD to left
The Crowding-out Effect
Changes in Taxes
Using Policy to Stabilize the Economy
The case of Active Stabilization Policy
Animal spirits
Economic fluctuations
Automatic Stabilizers
The case against Active Stabilization Policy
Short-run fluctuations
A substantial lag
Vietnam-Netherlands Programme - 2017
Do Huu Luat