15-6 10 Keynes's Conjectures 1.0<MPC<1 2.APC falls as income rises 3.Income is the main determinant of consumption. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 15-6 Keynes’s Conjectures 1. 0 < MPC < 1 2. APC falls as income rises 3. Income is the main determinant of consumption
1907 15-7 c=a+b Ya 6 b=MPC = slope of the consumption function a Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 15-7 C Y 1 b b = MPC = slope of the consumption function c=a+b Yd a
190 15-8 As income rises,the APC falls (consumers save a bigger fraction of their income) c=a+b Yd slope APC Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 15-8 C Y slope = APC As income rises, the APC falls (consumers save a bigger fraction of their income). c=a+b Yd
1907 15-9 C=a+bY 450 Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 15-9 C O Y C=a+bY c a Y E 450
190 15-10 Saving Function S=Y-C=Y-(a+bY)=-a+(1-b)Y APS=S/Y MPS=△S/△Y.=1-b APS+APC=1 MPS+MPC-1 Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 15-10 Saving Function s=Yd-c=Y-(a+bY)=-a+(1-b)Y APS=S/Yd MPS=△S/△Yd=1-b APS+APC=1 MPS+MPC=1