Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.1 6/24/83; site mit-eddie.UUCP
Path: utzoo!watmath!clyde!burl!we13!ihnp4!mit-eddie!lkk
From: lkk@mit-eddie.UUCP (Larry Kolodney)
Newsgroups: net.politics
Subject: Re: YOU EARNED IT??? - (nf)
Message-ID: <1607@mit-eddie.UUCP>
Date: Thu, 12-Apr-84 18:32:10 EST
Article-I.D.: mit-eddi.1607
Posted: Thu Apr 12 18:32:10 1984
Date-Received: Fri, 13-Apr-84 21:14:06 EST
References: <1527@mit-eddi.UUCP> <29200125@uiucdcs.UUCP>
Organization: MIT, Cambridge, MA
Lines: 23

From renner:
>Don't they teach basic macroeconomics to undergraduates any more?  If they
>do, then where does the myth that increased consumer demand is beneficial to
>the economy come from?
---
Well, I happen to be taking a course in Macroeconomics this term, and
the first  thing they teach us is that an increase in demand has the
following effect on GNP:

(DELTA)Y=(ALPHA)*(DELTA)(ABAR),

where (DELTA)Y= change in GNP, (DELTA)ABAR is change in autonomous
spending (in this case due to govt. spending) and (ALPHA) is a constant
called the multiplier.  Of course the complete model is much more
complex and takes such things as rising interest rates and investment
into acct.  But these only ask whether govt. spending is the most
efficient way to increase gnp.  The relationship does still exist.
-- 
Larry Kolodney
(The Devil's Advocate)

(USE)    ..decvax!genrad!mit-eddie!lkk  
(ARPA)	lkk@mit-mc