CONVEGNO REGIONALE CLIL – 21.11.2006

WORKSHOP TEMATICI – Economia politica titolo del modulo classe -scuola livello linguistico punto del programma contenuti disciplinari numero di ore materiale

(libri, software, DVD, videocassette, fotocopie…)

supporti

(laboratorio, luminosa, video.) lavagna

compresenza AGGREGATE DEMAND AND INCOME MULTIPLIER I. T. C. – indir. Mercurio – cl. 4^ B1 metà 2° quadrimestre v. presentazione 3-5 Libro di testo, fotocopie (in L2) chalk and talk sempre benvenuta

21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 1

AGGREGATE DEMAND AND INCOME MULTIPLIER

• Lesson 1 • Lesson 2 • Lesson 3 The aggregate demand function Spontaneous and induced changes in aggregate demand The income (GDP) multiplier

21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 2

LESSON 1 PLAN

(main topics)

•

The AGGREGATE DEMAND FUNCTION and its components [a quick revision: A=C+I+G+(X-M)];

•

The concept of EQUILIBRIUM NATIONAL INCOME (domestic output)



Ye;

•

The concept of INCOME (output) FULL EMPLOYMENT LEVEL OF



Yfe

(= the maximum level of income (real output) the economy is capable of producing with the existing capacity) 21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 3

LESSON 2 PLAN

(main topics)

Effects of spontaneous and induced changes in the level of A (Ye):

• •

choices for households and firms economic policy options

–

loose bias

–

tight bias

21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 4

LESSON 3 PLAN

(main topics)

The NATIONAL INCOME (domestic output) MULTIPLIER

  • a graphic representation • the concept and the description of income generation triggered by an initial change in the level of autonomous expenditure • deriving the multiplier from AD and C equations 5 21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon"

• Y • Yd • C • APC (c’) • MPC (c) • S • APS (s’) • MPS (s) • I • G • T • X • M • MPM (m) • AD (or A) • • • AS (or Su)   21 novembre 2006

CONVENTIONAL NOTATION

= income (output) = disposable income = consumption = average propensity to consume = marginal propensity to consume = saving = average propensity to save = marginal propensity to save = investment = government expenditure on goods and services = taxation (direct and indirect) = exports = imports = marginal propensity to import = aggregate demand = aggregate supply = “a change in”, e.g.  S = a change in savings = the multiplier M. CECOTTI - I.T.C. "A. Zanon" 6

ESSENTIAL GLOSSARY

Aggregate demand (AD): Aggregate supply (AS): Consumption (C): Investment (I): Government expenditure (G): the total of planned expenditure for the economy as a whole.

the total output of all firms in the economy (it’s the same as national income).

the total spending of households on goods and services.

it consists of capital goods (machinery, equipment, factory buildings etc.).

local and central government expenditure on goods and services.

Marginal propensity to consume [MPC (c)]: the rate of change of consumption with respect to income; MPC =  C/  Y (c =  C/  Y).

Average propensity to consume [APC (c’)]: the proportion of total income spent on consumption; APC = C/Y (c’ = C/Y).

21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 7

Checking comprehension Matching execises, e.g.:

the household sector the firm sector the government sector the international sector G X I C

Answer simple questions:

• • • • • Firms’ expenditure on investment goods depends both on …….. and ……… The slope of the AD line depends on ……………………..

If MPC = 0, then α = ……………….

An increase in α value leads to a steeper/flatter AD line.

Etc.

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The basic graph

A A=C+I+G 0 21 novembre 2006 45 ° Ye Yfe M. CECOTTI - I.T.C. "A. Zanon" Y 9

STUDENTS AT WORK

WORK IN SMALL GROUPS A A2 A1 45 ° 0 Y AD LINE HAS SHIFTED FROM A1 TO A2; WHAT MIGHT HAVE HAPPENED?

(make a list): ……………………………..

……………………………..

…………………………..... 21 novembre 2006 M. CECOTTI - I.T.C. "A. Zanon" 10