gs_-26_--_Consumption_Saving_and_National_Output

gs_-26_--_Consumption_Saving_and_National_Output -...

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1 ANNOUNCEMENTS (#1): ± Test will be held at from 7:30 am to 9:00 am. ± SCHEDULE OF EXAMS: o TEST #1 – and TEST #2 -- DONE! o TEST #3 – March 12, 2010 (Friday) – change of date o FINAL EXAM – To be announced – [FINAL EXAM WEEK] o Coverage is up to Chapter 16 of textbook . 3/2/2010 Econ 11 -- Lecture 26 2 ANNOUNCEMENT: To get a good grip on National Income and Balance of Payments Concepts, we have an EXERCISE UPLOADED IN UVLE. ± National Income Exercise ± Balance of Payments Exercise Lecture 26: CONSUMPTION, SAVING, INCOME; AGGREGATE SUPPLY AND DEMAND ± STATISTICAL EVIDENCE ON THE RELATIONSHIPS OF CONSUMPTION, SAVING AND INCOME ± AGGREGATIVE RELATIONS BETWEEN INCOME, CONSUMPTION AND SAVING ± AGGREGATE SUPPLY & AGGREGATE DEMAND
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2 CONSUMPTION, SAVING, INCOME ± Consumption expenditure and Saving ± STATISTICAL EVIDENCE: Surveys of family expenditure and income ± Income elasticity of expenditure ± Relationship of consumption to income or output 3/2/2010 Econ 11 -- Lecture 26 5 PERSONAL DISPOSABLE INCOME CONSUMPTION EXPENDITURE SAVING PERSONAL DISPOSABLE INCOME = CONSUMPTION + SAVING 3/2/2010 Econ 11 -- Lecture 26 6 Let us analyze the components of CONSUMPTION EXPENDITURE
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3 3/2/2010 Econ 11 -- Lecture 26 7 PHILIPPINE FAMILY INCOME AND EXPENDITURE (from SURVEY) FOOD Poor: 65% of income Rich: 43% of income TOBACCO Poor: 2.1% of income Rich: 0.6% of income HOUSING Poor: 8% of income Rich: 24.8% of income FUEL, LIGHT, & WATER Poor: 6% of income Rich: 5% of income TRANSPORT & COMM. Poor: 2.5% of income Rich: 8.3% of income EDUCATION Poor: 1.1% of income Rich: 5.3% of income Philippine Survey of Expenditure and Income – Some regularities ± Total expenditure rises with income ± Most items of expenditure rise with income increase, but some items rise faster than others ± Food expenditure is the most important item of consumption ± Saving rises with income, like consumption ± Poor families (compared to well-to-do families) o spend more on food relative to income o are likely to save less (or even “dis-save”). 3/2/2010 Econ 11 -- Lecture 26 9 Graph of data of Table 15-1, p. II-77 45 0 line A v e r a g x p n d i t u Average income (1,000) pesos Expenditure schedule Expenditure = Income line Consumption Saving 0
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4 3/2/2010 Econ 11 -- Lecture 26 10 Consumption schedule Components of Consumption expenditure and Income 45 0 line A v e r a g x p n d i t u Average income (1,000) pesos Consumption = Income line 0 Transport & Comm.
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This note was uploaded on 04/18/2010 for the course SE 67256 taught by Professor Dr.gerardosicat during the Spring '10 term at University of the Philippines Diliman.

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gs_-26_--_Consumption_Saving_and_National_Output -...

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