↑econ growth, ↓unN in open(export-oriented) economy

expansionary; ↓i/r, ↓cost of borrowing >

↑ consumption of big ticket items, ↑C >

↓i/r, ↓return to savings >

↓opportunity cost of spending, ↑consumer spending, ↑C >

↓i/r, ↓cost of borrowing >

given same returns to investment, > investment projects profitable, ↑I >

↑C,I causes ↑AD

initial △AD has greater final impact on eqm NY as ↑C,I stimulates further rounds of spending(multiplier)

dampen inflationary pressure(DPI)

contractionary; ↑i/r, ↑cost of borrowing >

↓ consumption of big ticket items, ↓C >

↑i/r, ↑return to savings >

↑opportunity cost of spending, ↓consumer spending, ↓C >

↑i/r, ↑cost of borrowing >

given same returns to investment, < investment projects profitable, ↓I >

↓C,I causes ↓AD

initial △AD due to ↓C,I leads to further reduction of spending(reverse multiplier)

Learn: H1 Economics - Macroeconomics(Theme 3)