7 The neoclassical growth model provides an account of how distribution of

7 the neoclassical growth model provides an account

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[7] The neoclassical growth model provides an account of how distribution of income between capital and labor are determined in competitive markets at the macroeconomic level over time with technological change and changes in the size of the capital stock and labor force. [8] More recent developments of the distinction between human capital and physical capital and between social capital and personal capital have deepened analysis of distribution. Consumption (economics) Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt . Generally, consumption is defined in part by comparison to production . But the precise definition can vary because different schools of economists define production quite differently. According to mainstream economists , only the final purchase of goods and services by individuals constitutes consumption, while other types of expenditure — in particular, fixed investment , intermediate consumption and government spending — are placed in separate categories. See consumer choice . Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g. the selection, adoption, use, disposal and recycling of goods and services). [ citation needed ] Likewise, consumption can be measured by a variety of different ways such as energy in energy economics metrics. The total consumer spending in an economy is generally calculated using the consumption function , a metric devised by John Maynard Keynes , which simply expresses consumption as a function of the aggregate disposable income . This metric essentially defines consumption as the part of disposable income that does not go into saving . But disposable income in turn can be defined in a number of ways - e.g. to include borrowed funds or expenditures from savings. Consumption also decreases demand.
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