Transcript Document

Chapter 11. Income and Expenditure
Link to syllabus
Skip Income-Expenditure Equilibrium, pp. 326-331
(a.k.a. ‘The Keynesian Cross’).
Also, skip the accelerator model of investment p. 323, and
changes in inventories.
Previews of (Still) Coming Attractions!
The AD-AS Model. Fig. 12-11, p. 361
Further Previews of Coming Attractions !
Shifts of Aggregate Demand Fig. 12-4, p. 346
Caused by changes in Business Investment or Government Expend.
Consumption
Function,
Figures 11-1
and 11-2, pp.
316-317
Actual data for
2009, by deciles
Link to ISR
http://www.isr.umich.edu/
Latest news release
Link to RSQE forecast
Example of U-M’s Consumer Survey, 2002
Formulas and
Definitions for
The Multiplier.
p. 314
Rounds of Increases of Real GDP. ΔAAS=100, MPC=0.6
p. 313
Thus the multiplier is 250/100 = 2.5 which is 1/(1 – 0.6)
Table 11-2 p. 314. Investment, Consumption, and
Real GDP in the Great Depression.
Fluctuations in Consumption and Investment
Spending During Recessions. Fig 11-6, p. 322
Spending on business investment is much more unstable than consumption
Links to RSQE
http://rsqe.econ.lsa.umich.edu/index.php?page=forecasts&name=US
http://rsqe.econ.lsa.umich.edu/Docs/summary.pdf