ECON 1P92 Lecture : chapter 21

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ECON 1P92 Full Course Notes
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ECON 1P92 Full Course Notes
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Chapter 21 the simplest short run macro model. Total desired expenditure (aggregate expenditure, or ae): what would be spent, given y, on domestically produced goods and services. Ae is divided into four categories: desired consumption (c, desired investment (i, desired government purchases (g, desired net exports (nx = x im) Ae = c + i + g + x im. Do not change with changes in national income. Change with changes in national income (y) Relationship between c and variables that influence it. Determined by current real disposable income (yd) Were a is autonomous consumption expenditure; b yd is induced consumption expenditure. Change in desired consumption divided by change in disposable income. Mpcyd = 80 / 100 = 0. 8. Mpcyd (0. 8) is constant since slope of line is constant. Change in desired saving divided by change in disposable income. Total desired saving divided by total disposable income.

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