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This chapter provides insights into the Keynesian consumption function, illustrating how marginal propensities to consume affect overall consumption patterns. It includes key exhibits showing U.S. personal consumption and disposable income trends from 1933 to 2003. Movements along and shifts in the consumption function are analyzed, alongside a comparison of the volatility between real investment and real consumption from 1965 to 2003. Detailed exhibits capture the relationship between investment demand and aggregate expenditures, backed by data from the Bureau of Economic Research.
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CHAPTER The Keynesian Model 18
EXHIBIT 2 THE CONSUMPTION FUNCTION
CONSUMPTION FUNCTIONS FOR TWO MARGINAL PROPENSITIES TO CONSUME EXHIBIT 4
U.S. PERSONAL CONSUMPTION AND DISPOSABLE INCOME, 1933–2003 EXHIBIT 5 Source: Bureau of Economic Research, http://www.bea.doc.gov/bea/dn/nipaweb/SelectTable.asp?Selected-N.
MOVEMENT ALONG AND SHIFTS IN THE CONSUMPTION FUNCTION EXHIBIT 6
A COMPARISON OF THE VOLATILITY OF REAL INVESTMENT AND REAL CONSUMPTION, 1965–2003 EXHIBIT 7 Source: Bureau of Economic Analysis, http://www.bea.doc/bea/dn/nipaweb/SelectTable.asp?Selected=N, Table 1.1.1.
MOVEMENT ALONG AND A SHIFT IN A FIRM’S INVESTMENT DEMAND EXHIBIT 8
THE AGGREGATE INVESTMENT DEMAND AND AUTONOMOUS INVESTMENT DEMAND CURVES EXHIBIT 9
EXHIBIT 10 AGGREGATE EXPENDITURES FUNCTION DATA