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.

The AD-AS Model. Fig. 12-11, p. 361

Previews of (Still) Coming Attractions!

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 for2009, 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/Docs/summary.pdf

http://rsqe.econ.lsa.umich.edu/index.php?page=forecasts&name=US