ECN 204 Chapter 10: McConnell14CE_IM_Macro_ch10
12 Oct 2017
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Document Summary
The central purpose of this chapter is to introduce three basic macroeconomic relationships that will help us organize our thinking about macroeconomic theories and controversies: first, the focus is on the income-consumption and income-saving relationships. Second, the relationship between the interest rate and investment is examined. Finally, the multiplier concept is developed, relating changes in spending to changes in output. All of this is done outside the formal framework of the aggregate expenditures model, which is developed in chapter 11. There are no major changes in content for this chapter. The relevant tables and data have been updated. Comments and teaching suggestions: regardless of whether you develop the multiplier theoretically or more intuitively, if you require students to calculate multiplier effects, expect to give them lots of practice. million increase in investment spending. (some instructors use an oversized paper -million.
