Economics 1022A/B Lecture Notes - Lecture 4: Tax Rate, International Trade, Real Interest Rate
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ECON 1022A/B Full Course Notes
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Planned aggregate expenditure: planned consumption expenditure + planned business investment + planned. Government expenditure + (planned exports planned imports) Consumption expenditure and saving: disposable income (yd) Equals aggregate income (y) net taxes (nt) Can be either spent ( c ) or saved (s) Yd= c + s: consumption function, savings function. Relationship between consumption expenditure and disposable income. Marginal propensity to consume: the marginal propensity to consume (mps) is the fraction of a change in, mpc = change in c / change in yd disposable income (yd) that is consumed (c) Marginal propensity to save: the marginal propensity to save (mps) is the fractional of a change in disposable, mps= change in s / change in yd income that is saved. Mpc and mps: mpc + mps = 1. Influences on consumption expenditure (and saving: disposable income. Movement along the consumption and savings functions: shifts in the consumption and savings functions.