UNC-Chapel Hill ECON 101 - Consumer Spending & Demand; Demand-Side Equilibrium; Multiplier Analysis (3 pages)

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Consumer Spending & Demand; Demand-Side Equilibrium; Multiplier Analysis



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Consumer Spending & Demand; Demand-Side Equilibrium; Multiplier Analysis

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Lecture 14 notes continued with lecture 15: Consumer Spending & Demand; Demand-Side Equilibrium;Multiplier Analysis


Lecture number:
12
Pages:
3
Type:
Lecture Note
School:
University of North Carolina at Chapel Hill
Course:
Econ 101 - Introduction to Economics
Edition:
1

Unformatted text preview:

ECON 101 1st Edition Lectures 12 Consumer Spending Demand Demand Side Equilibrium Multiplier Analysis Chapter 25 Aggregate Demand total amount that all consumers firms government agencies and foreigners spend on US final goods and services schedule not a fixed number Consumption total amount spent by consumers on newly produced goods and services homes are excluded Investments flow of a firm s resources into the production of new capital Depends on interest rate high interest low investment low interest high investment Planned Investments business purchases of machines capital that can be used for further production Unplanned Investments additional inventory capital for spikes in demand Government Spending anything the govt spends money on taxes infrastructure education etc often assumed to be exogenous AgD Consumption Investments Government Spending Net Exports Exports Imports AgD C I G Ex Im G f Y it can be any function of Y If you want to write down a linear function of G it would be G Gbar g Y but it can be anything Just a reminder do not spend time remembering formulas for equilibrium conditions or multiplier the important thing is to UNDERSTAND how they are derived and how you can get the right answer given any type of setup These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute MPC Consumption Yd that produces change in C Factors that Shift Consumption Change in price Yd causes movement along demand schedule Change in other factors moves schedule upwards or downwards Personal Savings rate ratio of consumer saving to disposable income Money fixed asset asset with fixed dollar value Permanent income tax cuts stimulate spending better than temporary cuts of equal magnitude since permanent taxes are a much bigger future income expectation Exports rise when GDP rises and vice versa NOT imports since Y C I G EX IM Chapter 26 Equilibrium the point at which consumers and



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