ECON 1010 Lecture Notes - Lecture 27: Real Interest Rate, Disposable And Discretionary Income, Tax Rate
Document Summary
Expenditures have a magniied efect on real gdp through the muliplier. Chapter 27: expenditure mulipliers: consumpion expenditure (c, investment (i, gov. expenditures on goods and services (g, net exports exports (x, minus imports (m) Real gdp = y = c + 1 +g + (x-m) Disposable income: yd = y nt, yd = disposable income, nt = net taxes taxes minus transfer payments, y= real gdp or aggregate income, yd = c + s. Marginal propensity to consume: the fracion of a change in disposable income that is consumed o. Consumpion funcion: the relaionship between consumpion expenditure and disposable income, the general form of the consumpion funcion, autonomous consumpion changes because of changes in interest rates, wealth and expectaions of future economic condiions. Marginal propensity to save: the fracion of a change in disposable income that is saved o, if disposable income increases by 1, saving will increase by 0. 25.