Recommended
More Related Content
Recently uploaded
Recently uploaded (20)
Featured
Featured (20)
Aed1193 topic3
- 2. Salawati Alwani Muhammad/AEB1193/2019 Aggregate Demand – Aggregate Supply Approach Leakage – Injection Approach AS = AD Leakage = Injection
- 3. Consumption (C) Saving (S) Average Ratio of total consumption to total income APC = Total Consumption Total Income Ratio of total savings to total income APS = Total Savings Total Income APC + APS = 1 Marginal Ratio of change in total consumption to changes in total income MPC = Change in Total Consumption Change Total Income Ratio of change in total savings to change in total income MPS = Change in Total Savings Change in Total Income MPC + MPS = 1 Function C = a + bYd S = -a + (1-b)Yd Salawati Alwani Muhammad/AEB1193/2019 Income = Consumption + Saving Y = C + S
- 4. 2-sector economy 3-sector economy 4-sector economy Circular flow AD-AS approach AS = AD Y = C + I AS = AD Y = C + I + G AS = AD Y = C + I + G + (X-M) Leakage-Injection approach I = S I + G = S + T I + G + X = S + T + M Multiplier I I, T, G ,balance budget I, T, G, balance budget, M Salawati Alwani Muhammad/AEB1193/2019 Yd = Y Yd = Y- T Yd = Y- T
- 5. Salawati Alwani Muhammad/AEB1193/2019 I C=100+0.7Y C+I Y=AD 100 600 500 2000 2000 I 500 S=-100+0.3Yd -100 0 0 National Income AD (C,I) National Income Leakage-Injection Info: Autonomous consumption = 100 MPC = 0.7 Autonomous Investment = 500
- 6. Salawati Alwani Muhammad/AEB1193/2019 C=175+0.75Y C=200+0.75Y C+I+G Y=AD 175 325 150 1100 1100 I+G 200 S+T=-225+0.25Yd (after tax) -225 0 0 National Income AD (C,I) National Income Leakage-Injection Info: C = 200 + 0.75Yd I=100 G=50 T=100 (before tax) (after tax) -200 S+T=-200+0.25Yd (before tax)
- 7. Salawati Alwani Muhammad/AEB1193/2019 C+I+G+(X-M) Y=AD 325 250 1300 1300 I+G+X S+T+M -75 0 0 National Income AD (C,I) National Income Leakage-Injection Info: C = 200 + 0.75Yd I=100 G=50 T=100 X=100 M=50