lec ch7,8 - Goods and Services Market Human beings are not...

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Goods and Services Market Human beings are not naturally born narrow minded, it takes four years of graduate-level training in economics to turn them into ones. Martin Bronfenbrenner (?)
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National Income Identity Nominal GDP = Nominal Expenditure Real GDP = Real Expenditure
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Explanation 10,000,000 8,000,000 +2,000,000 10,000,000 11,000,000 -1,000,000 10,000,000 10,000,000 0 Production Demand Δ (Inventory) ± Expenditure
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Goods Market Equilibrium Production Demand Δ (Inventory) Y AD ± Δ (Inventories) ± Y > AD Δ (Inventories) > 0 Y < AD Δ (Inventories) < 0 Y = AD Δ (Inventories) = 0
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Aggregate Demand Consumption Investment Net Exports Government Spending C I G EX - IM AD
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Goods Market Equilibrium Y = C + I + G + (EX IM) AD
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Determinants of Consumption Disposable Income Y d = Y TX + TR Expected Future Disposable Income Y d e = Y e TX e + TR e Real Wealth (A/P) Real Interest Rate r – Π e
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Your income increases by $10,000, by how much will your consumption increase? $100,000
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lec ch7,8 - Goods and Services Market Human beings are not...

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