stuck at ourspace72, revising for maec test held at 5.10pm today. so sian! there's nothing to study except formulas.

aggregate expenditure and equilibrium output
characteristic of consumption function
1. a and b always constant
2. upward sloping linear curve
3. gradient always positive
4. never start at zero.

C=a+bY
Y=C+S
AE=C+I

at equilibrium,
Y=AE
C+S=C+I
therefore, S=I

investment multiplier= 1/(1-MPC)

government and fiscal policy
expansionary policy during recession, increase in government spending and decrease in tax.
contractionary policy when overheating, decrease in government spending and increase in tax.

balanced budget when G=T
budget surplus when G more than T
budget deficit when G less than T

C=a+bYd
Yd(disposal income)= Y-T
Y=C+S+T
AE=C+I+G

at equilibrium,
Y=AE
C+S+T=C+I+G
therefore, S+T=I+G

government spending multiplier= 1/(1-MPC)
tax multiplier= 1-1/(1-MPC)

ahhhh!!! i'm mad =x