Intermediate Macroeconomics Ch3 notes

Intermediate Macroeconomics Ch3 notes - Chapter 3: The...

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Chapter 3: The Goods Market The Composition of GDP GDP = C + I + G + NX C: Consumption, these are the goods and services purchased by consumers. I: Investment, which is also called fixed investment or nonresidential investment, is the purchase by firms of new plants or new machines, excluding houses or apartments. G: Government spending, these are the goods and services purchased by the public sector. Government spending does not cover government transfers, nor interest payment to government debt. NX: Net exports, these are total exports minus total imports. The Demand for Goods Z = C + I + G + NX, NX = X – IM Z is the total demand in the economy Assuming: Identical goods and services. Firms are willing to supply any amount of the good at a given price. There is no international trade in the economy. Given X = IM = 0 Z = C + I + G C = c 0 + c 1 Y D C: consumption. c 0 : autonomous consumption, it indicates the consumption level when income is zero. c
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This note was uploaded on 04/05/2009 for the course ECIF ECIF200 taught by Professor Henry during the Spring '09 term at University of Manchester.

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Intermediate Macroeconomics Ch3 notes - Chapter 3: The...

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