chapter9 appendix

chapter9 appendix - CHAPTER 9 APPENDIX The Keynesian Cross...

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Unformatted text preview: CHAPTER 9 APPENDIX The Keynesian Cross The Keynesian Cross The Keynesian cross focuses on the relationship of total spending to the value of output. It doesnt make an explicit distinction between price levels and real output. Aggregate expenditures are the rate of total expenditure desired at alternative levels of income, ceteris paribus. The Consumption Shortfall If full employment equaled $3 trillion and the consumption function is: C F = $100 billion + 0.75($3000 billion) = $2350 billion C = $100 + 0.75Y D Then consumption at full employment would equal: The Consumption Shortfall Expenditure Income (Output) $3000 1000 2000 Z F C F Total output Output not purchased by consumers 2350 2000 1500 1000 500 Y F 45 Consumption function (C) = $100 + 0.75 Y D 3000 Nonconsumer Spending Investors, governments, and net export buyers add to consumer spending to equal aggregate expenditure....
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chapter9 appendix - CHAPTER 9 APPENDIX The Keynesian Cross...

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