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  • Scan 04 Nov 2023

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    aqadir989962
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    This document discusses key concepts in macroeconomics including: 1) A two-sector model of the economy that shows consumption (C) and investment (I) as the two components of aggregate demand. 2) The consumption function which shows the relationship between consumption and national income based on the marginal propensity to consume. 3) The saving function which is the inverse of the consumption function and shows the relationship between saving and national income based on the marginal propensity to save.

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    Scan 04 Nov 2023 (3)

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    This document discusses key concepts in macroeconomics including: 1) A two-sector model of the economy that shows consumption (C) and investment (I) as the two components of aggregate demand. 2) The consumption function which shows the relationship between consumption and national income based on the marginal propensity to consume. 3) The saving function which is the inverse of the consumption function and shows the relationship between saving and national income based on the marginal propensity to save.

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    © All Rights Reserved
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    7 views1 page

    Scan 04 Nov 2023

    Uploaded by

    aqadir989962
    This document discusses key concepts in macroeconomics including: 1) A two-sector model of the economy that shows consumption (C) and investment (I) as the two components of aggregate demand. 2) The consumption function which shows the relationship between consumption and national income based on the marginal propensity to consume. 3) The saving function which is the inverse of the consumption function and shows the relationship between saving and national income based on the marginal propensity to save.

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    of 1

    ycgake bemand

    ne PLANNINS tbuy ata yien dind o Incomein One tecounbhy yea

    Padvate rschald +
    Componnts
    Conaum-HonEenditve Inytstmen+ Èondit (X- -M)
    +

    Comawmptibn Exnditu,
    is dd'hect infuenced by E by the
    bysP0SAB1E INCOMe ncome 0n CAPITAL GOODs On Coumn 4ovsRNENT (Difnene)
    from all atwnes for Sndst is(AuTD NOMOVS) Go&Catited
    aualade
    AbhaTWo-Seete Model AD: C+I
    mpsntont Points of Ab
    Posie Comunotion cven hen Ince me is ZERO
    slope of consum}fen Cunveis upwands
    3 Slope ot tutotALAMAf Jnvestmentis a STRAIGHT LINE lareltox anis.
    kgg. Suply = Natinal Jncomc
    Components of AS
    Y= As= cts CNatpmadl Jncome =hgeste Supslyy (pnaumbtien+goviy)
    CONSUMPT)ON FUNCTION- ( Propencity to Consume)
    b Means func tionadselatonshp betwesn Cowsumpten &Natfonal ncome
    Equatton- C=f(y Nati nal Sncgme OMPDRTANT PoUNTS- of APC
    function Rredationshi
    Consumjfe OAPC> than 1)
    Mone

    Ty PEx OF Propongity to Consome APC<I(Lecathsy 1)


    APC falls th Jncreascn
    twnge Iro þenaity-to Manad rpensiyto INCONE
    Conum (APC) ConiwmeCMPe) Ctan nevbe ZER (o)
    SAVING FNCTION
    Jncome (9) Sf(y) CPropenaityto
    MPC 4C Jmbortent Polt o MPC (Aavthy) (3nome )
    Propensity to Save
    |Ø MPC o PODR Is morcthsn that
    YIncon 3MPC falls with sceeIslre JNcREAE I» TNCHE roto
    SAV)

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