ECON 103 Lecture Notes - Lecture 3: Capital Good

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 103
• Professor: Mehrene Larudee

Document Summary

Macro-econ lecture 3. 1: labor, capital goods (buildings, structures, equipment, tools, land and natural resources (air, animals, sun, wind, knowledge (science, technology, experience) How much of those resources we actually use: depends on level of demand (spending), that (look at pp) Government (spend or expenditures: foreign residents (which could be all three) Exports: omits (churches- nonprofits, omits (crime organizations, aggregate expenditure=c+i+g+x-m (subtract all imported good) Consumption: means buying (by households); does not mean eating or using up. Spending money on increasing the physical production capacity of the firm (also may mean spending money to increase workers knowledge. Not mean (buying securities, real estate, or other assets; changing the. The economy as a circular flow: form of one"s wealth in this way. Simplest model (actors are: households (consumption c, firms (investment i) Vale y is produces income y are paid. We ask: is y equal to c+i? if yes is in equilibrium.