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Lec_8_the_shape_of_the_E_curve

Lec_8_the_shape_of_the_E_curve - EC 400 The Components of...

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EC 400 1 The Components of Planned Expenditure Components of Planned Expenditure E = C + I + G + (X-M) Components of Planned Expenditure E = C + I + G + (X-M) C = personal consumption expenditures
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EC 400 2 Components of Planned Expenditure E = C + I + G + (X-M) C = personal consumption expenditures I = gross private domestic investment Components of Planned Expenditure E = C + I + G + (X-M) C = personal consumption expenditures I = gross private domestic investment G = government expenditures on goods and services Components of Planned Expenditure E = C + I + G + (X-M) C = personal consumption expenditures I = gross private domestic investment G = government expenditures on goods and services (X-M) = net exports
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EC 400 3 Consumption Total output – taxes = disposable income Consumption Total output – taxes = disposable income Let Y = real GDP T = total taxes DI = disposable income, then DI = Y - T Consumption C increases with DI Share of DI saved increases with DI
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