Intermediate Macroeconomics 2 Lecture 172 1 8 765
Intermediate Macroeconomics Lecture 17
Microeconomics behind Macroeconomics 12 ● Consumption 9 3 ● Investment 765 ● Money s and d ● Advances in business cycle model
Microeconomics behind Macroeconomics ⚫Consumption ⚫Investment ⚫Money S and D ⚫Advances in business cycle model
Consumption 12 ■ Keynes& C function 9 3 a Fisher intertemporal choice 765 a Life-cycle hypothesis a Permanent hypothesis a Random-walk hypothesis Pull of instant gratification
Consumption ◼ Keynes & C function ◼ Fisher & intertemporal choice ◼ Life-cycle hypothesis ◼ Permanent hypothesis ◼ Random-walk hypothesis ◼ Pull of instant gratification
Keynes consumption function 12 C=C+cY 9 3 o Marginal propensity to consume(0<C<1) 765 marginal consumption/marginal income Average propensity to consume (as YT) total consumption/total income 3 Interest does not affect consumption
Keynes & consumption function ① Marginal propensity to consume (0<c<1) marginal consumption/marginal income ② Average propensity to consume (↓as Y↑) total consumption/total income ③ Interest does not affect consumption C = C+ c Y −
Keynes consumption function 12 C=C+C·Y 9 3 765 MPC APC
Keynes & consumption function Y C C = C+ c Y − APC MPC 1 1