AS.180.101 Lecture Notes - Lecture 3: Ceteris Paribus, Autonomous Consumption, Consumption Function
Document Summary
Lecture #8: jobs, unemployment, participation (barometers geared to measure the labor market) Exam #1: 20 fill in the blanks / 60 words given. General historic background: 1930s down; 1960s up: data interpretation. Manipulate data in terms of growth rates (annualized: absolute/comparative advantage. C= autonomous consumption + by: autonomous consumption > 0. Key drivers: ceteris paribus, if we change income we move along consumption function, changes in confidence will shift the intersection (slope does not change, changes in wealth or future expectations or interest rates will shift the curve. Interest rates go up, ceteris paribus, consumption will decrease! Data shows when ir are rising, consumption is actually increasing (consequence of ceteris paribus: little phrase ceteris paribus never true, really (everything is moving) 2009 falling confidence: autonomous consumption declines, plunging wealth change in the slope, less steep slope (people spend less of a fraction of their income, shift downward.
