ECON 103 Lecture Notes - Output Gap, Loanable Funds, Transfer Payment

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14 Apr 2014
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Gdp = total goods and services for the annual year. Nominal is calculated at current market prices real includes inflation. National income = sum of all factor incomes. Gdp = i + c + g + x. Substitute goods: goods that can be substituted for exactly the same. Complimentary goods: goods that go along with that one, buns for hotdogs. Inferior goods: goods that increase in sales as price increases for a normal good. Net dp indirect tax = national income. National income direct tax + transfer payment = disposable income. Average propensity to consume: consumption / income or 1-aps. Average propensity to save: 1- apc = aps. Marginal propensity to consume: % of change in income consumed (national) income (y) = consumption (c) + investment (i) + government (g) But income graphed with consumption gives you consumption curve. C curve has poor nations on left and rich on right such that makes more, spends more.

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