we normally assume that substraction is better than income
1)W increase and l decrease and N increase ALWAYS!
2)delta9pi- T) pure income effect (pi-T) increase and C increase and l increase
when cons leisure are perfect compotion/ consume at a fixed propo
population growth depends on Q of consumption per worker
Ni= population next period
N- population this period
C= consumption
C divided by N= consumption per worker increases they make more babies C divided
by N goes down
- since foodparistable - consumed
Chapter 9
2 period model
- since 2 periods, consumer choice between current consumption= C future
consumption= S
Assumptions
1) representative consumer
- economy has in consumers
2) no work- liesure analysis
- recieve exgeous income
3) Y= current income
Y
business cycle (% of deviation n real GDP from trend) + economic variables
Y=C+I+G+(X-M)-> assumed closed economy (X-M)
consumption- procyclical -> (+) correlated % standard deviation (coincident variable)
consumption is less variable than GDP
Investment-
Exam 2
60m C + 2 s A
(60)
(10)
(70)
chapter 1 to chapter 5
competitive equilibrium
C=Y-G
Point A->competitive equilibrium
slope of PPF= MPn
therefore MRTlc=MPn=W
Budget constraint=slope =W
non wage income ->pi- T is above zero
wage w pi - T > 0
pi - G.0
b
the macroeconomics
circular flows
basic components
1) Households
2)Films
3)Government
4)International
Leakage= Injections
leakage- savings and taxes
injections- investment and government expenditures
not of redistribution S+T+M=I+G+X
(I-S)+(G-T) +(X-M)=0
sampling error- is the difference between the true value of the population parameter and
the value of the corresponding sample statistic (because we are examining a subset of
the population) always exist!
non sampling error are other kinds of errors that
real disposable income
real wafe =w-> 1 unit of labour exchanging as for waves of consumption goals
therefore real wage income
but also income from firm T's(dividends)
but TAXES!
lumsum tax T-> not related to income
real disposable income=
C=diposable inc
pareto optimality
1) externality
(-) eternality - cost that producer does not consider in their production decisions (ex
pollution)
(+) externality- benefit to society that consumer does not consider
2) distorting taxes
- lump sum taxes do not distort dec
aggregate Production Function
q=f(kN) N= Number of work hours
Q= entire output
->unemployment N (goes down) = GDP (also goes down)
1) Cdn over age 15 (work force)
2) Sub Voluntarily withdrawn
->full time students
->retired
->handicapped
->house spouses
La