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CH9- - up S goes down and vice-versa...

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10.04.2009-PART2 CHAPTER 9 BUILDING THE AGREEGATE EXPENDITURES MODEL Non-income Determinants of Consumption and Saving (Shifters) Other factors also may change C and S. These are shifters of C and S curves. Shifting of C means consuming more (or less) at the same level of DI, and shifting of S means saving more (or less) at the same level of DI. So, what are the shifters of C and S? a.Wealth: When, wealth goes up C also goes up and vice-versa. So, also when wealth goes
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Unformatted text preview: up S goes down and vice-versa. b.Expectations: Expectations about prices, incomes shift C and S. c.Household Debt: If household debt at each level of DI is increased C shifts up. d.Taxation: Taxation reduces both C and S. Because taxes are take out a part of our incomes. So, when income is reduced so are C and S. Cases of a, b, and c consumption and savings schedule more or shift in opposite direction. In case of d, both schedules shift down in the same direction....
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  • Spring '11
  • hasandag
  • Stock and flow, Household income in the United States, Capital accumulation, non-income determinants, 10.04.2009-PART2 CHAPTER

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