Beruflich Dokumente
Kultur Dokumente
Expenditures
Keynesianism
Great Depression
APC + APS = 1
Marginal Propensity to
Consume (MPC)
The
MPC=
Change in Consumption
Change in Disposable Income
MPC = C/
DI
MPS=
Change in Savings
Change in Disposable Income
MPS
/DI
Marginal Propensities
MPC
+ MPS = 1
.: MPC = 1 MPS
.: MPS = 1 MPC
Remember,
people do two
things with their disposable
income, consume it or save
it!
Multiplier
= Change in AD
Change in Spending
Multiplier = AD/
C, I, G, or X
Why
Tax
= -MPC/1-MPC
If
or
/MPS
-MPC
What is Investment?
Money
spent or
expenditures on:
the difference?
How
Downward sloping
Why?
r
%
5%
3%
ID
$2
trillion
$3
trillion
IG
Business Taxes
Technological Change
Stock of Capital
Expectations
Shifts in Investment
When investment demand shifts,
Demand
different levels of gross private
r
%
4%
ID1
ID
$2.5
trillion
$3.25
trillion
IG
Instability of Investment
Durability
Irregularity
of Innovation
Variability
of Profits
Variability
of Expectations
Instability of Investment
DLF &
SBonds
q
QLF
r1
r
DLF
q
q1
QL
F
DLF
1
r
r1
DLF
1
q1 q
DLF .: r% & QLF
QLF
DL
F
SLF 1
r
r1
DLF
q
q1
QL
F
SL
F
r1
r
DL
F
q1
QL
F
r%
r%
r1
r
DLF
DLF
q
q1
ID
QL
I1 I
IG