ECON 104 Lecture 7: 6 - 8th of Feb

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ECON 104
Ozgur Orhangazi

Came in late today 20 mins, walked in on marginal propensity to consume. Marginal propensity to consume – the fraction of an income that is spent, measured in 0-1.0 Aggregate saving – The part of aggregate income that is not consumed. S=Y-C (triple equals sign, and it means that the equation is an identity that is always true.) Marginal propensity to save (MPS) – That fraction of a change in income that is saved. MPC+MPS = 1 Because MPC and the MPS are important concepts, it may help to review their definitions. The Aggregate Consumption Function Derived from the Equation C = 100-75Y The aggregate consumption function derived from the Equation C = 100-75Y We consume a certain fraction of our income. The idea is that if we consume everything, it would be bad, but if we saved everything, it would be bad as w
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