• Discuss the aggregate spending approach to macroeconomic equilibrium. This is sometimes termed Keynesian Economics (after John Maynard Keynes, rhymes with rains). What is macroeconomic equilibrium? What are the major spending components. What's the difference between actual and potential GDP and why is that difference important (ie. recessionary and inflationary gaps). What's the importance of a multiplier? How does the the economy move from one equilibrium to another given a spending change? What are inflationary and recessionary gaps? Explain equilibrium from a savings and investment perspective.