University of California Berkeley Impact of Shocks on SI Model Worksheet

1. impact of shocks on S-I model (video 21)

For this activity you are asked to discuss and show the impact of rise in income (done in Video 20) or the impact of a fall in tax on capital (done in Video 21). Submit an image along with your discussion.

You can submit your notes after watching the video.

Make sure to do the following:

• Discuss the immediate impact (i.e. which curve shifts and why; what is the reasoning)
• Discuss the impact on r, and the quantities of S and I.
• Illustrate the impact on the S-I diagram
• The final impact on Y, C, G, I, and S.

ACTIVITY: choose only one. You are not required to do both!

2. Impact of rise in G on S-I model

For this activity you are asked to discuss and show the impact of rise in government expenditure (done in Video 22). Submit an image along with your discussion.

You can submit your notes after watching the video.

Make sure to do the following:

• Discuss the immediate impact (i.e. which curve shifts and why; what is the reasoning)
• Discuss the impact on r, and the quantities of S and I.
• Illustrate the impact on the S-I diagram
• The final impact on Y, C, G, I, and S. Is there crowding out? Why or Why not?