01-08-08 1
Exercises
Linear equations for the consumption and
saving schedule take the general form
C=a + bY and S=-a+(1-b)Y,where C,S and Y
are consumption,saving and national income
respectively.
(1) Use the given data to develop specific
numerical values for the consumption and
saving equations,Write the using these values,
(2) what is the economic meaning of b? what is
the economic meaning of (1-b)?
01-08-08 2
Household disposal
income (DI)
Consumption (C)
100 90
200 170
01-08-08 3
question
Briefly explain the concept of consumption
function.
Explain how changes in net wealth and the
price level alter the consumption function.
GDP=C+I+G+NX
01-08-08 5
Investment
Investment refers to the expenditures
on new plants,capital equipments,
machinery and so on.
投资指对新工厂、新机器、新设备等的支出。
01-08-08 6
example
Suppose the owner of a small shop is
considering investing a new machine that
costs $1000 and it has a useful life of a
year.
The expected net revenue is $1100,the
net profit is $100.
The expected rate of net profit(预期净利润率 ) is 10 per cent,=(1100-1000)/1000
01-08-08 7
Interest rate(利率 ) ------
the financial cost（财务成本）
If the interest rate is 15% and the expected
rate of net profits is 10%,will it be
profitable to invest?
Of course not.
01-08-08 8
Generalization (总结 )
If the expected rate of net profits exceeds the
interest rate,it will be profitable to invest.(如果预期利润率超过利率，值得投资 )
But if the interest rate exceeds the expected
rate of net profits,it will be unprofitable to
invest.（如果利率超过预期利润率，不值得投资）
01-08-08 9
What if inflation is occurring?
The expected rate of net profits= 10%
The nominal interest rate(名义利率 ) =
15%
the rate of inflation （通货膨胀率）
=8%
Is it profitable to invest?
01-08-08 10
The real interest rate=
The nominal interest rate - the rate
of inflation
实际利率＝名义利率－通货膨胀率
01-08-08 11
Which item is profitable to invest?
Amount of
investment
Expected rate of
net profits
A 100 10%
B 50 8%
C 150 6%
D 100 4%
01-08-08 12
The less the interest rate,the more the
amount of the investment,(利率越低，投资越多，利率越高，投资越少。 )
r
I
Investment demand
curve(投资需求曲线 )
01-08-08 13
Non-interest determinants of
investment demand(影 响 投 资 的非利率因素 )
Acquisition,maintenance and operating
costs(购置成本，维护成本和营业成本 )
Business taxes(营业税 )
Technological change(技术变革 )
The stock of capital goods on hand（资本品的存量）
Expectation(预期 )
01-08-08 14
The investment demand curve plots the
relationship between planned investment
expenditure and
(a) The nominal interest rate
(b) The real interest rate
(c) The price level
(d) The real GDP
01-08-08 15
Equilibrium levels of output and income
(产出和收入的均衡水平 )
１,Expenditures-output approach(支出－产出法 )
AD
Y:GDP
Y=AD
AD
Ye
01-08-08 16
AD=C+I
AD Y=AD
Ye Y:GDP
１,Expenditures-output approach(支出－产出法 )
The condition of equilibrium(均衡条件 ),
Y=AD=C+I
01-08-08 17
question
In a two-sector economy,if the consumption
function is C= 10+0.8Y and planned
investment is $15,the equilibrium expenditure
is
(a)$50
(b)$150
(c)$125
(d)$175
01-08-08 18
2.leakages-injections approach
(漏出 -注入法 )
Saving represents leakage(储蓄代表 漏出 )
Investment represents injections(投资代表 注入 )
01-08-08 19
2.leakages-injections approach
(漏出 -注入法 )
Ye
Condition,I=S
S I
Y:GDP
S
I
equilibrium
01-08-08 20
question
In a two-sector economy,if the consumption
function is C= 10+0.8Y and planned
investment is $15,the equilibrium expenditure
is
(a)$50
(b)$150
(c)$125
(d)$175
01-08-08 21
Case study? 蜜蜂的寓言
18世纪初，一个名叫孟迪维尔的英国医生写了一首题为,蜜蜂的寓言,的讽喻诗。这首诗描述了一群蜜蜂的兴衰史。最初，蜜蜂们追求豪华的生活，浪费成性，结果整个蜂群兴旺发达。后来，
它们在一个“哲学蜂”的劝说下崇尚节约，结果弄得社会衰落，终于被另一个蜂群所消灭。这首诗因为宣扬“浪费有功”，当时被英国中塞克斯郡大陪审团判定为败类作品。但在 200多年后，这部作品却启发凯恩斯建立了以总需求为中心的宏观经济理论。
01-08-08 22
Saving,investment and the paradox
of thrift
If society attempts to save more,will the real
GDP be more or less?
01-08-08 23
Saving,investment and the paradox of
thrift(节约悖论 )
S I
Y:GDP
S2
I
Y2 Y1
S1
Multipliers,government budgets and
net exports(乘数,政府预算和净出口 )
对应教材 P.234
01-08-08 25
1.In a two-sector economy,if the
consumption function is C= 10+0.8Y
and planned investment is $50,
calculate the equilibrium expenditure,
the amount of consumption and
saving,
2.if the planned investment is $100,
calculate the equilibrium expenditure.
01-08-08 26
if the consumption function is
changed to be C= 10+0.9Y and
planned investment is still $50,
calculate the equilibrium expenditure,
the amount of consumption and
saving,
If the investment is added to $90,
calculate the change in equilibrium
expenditure
Exercises
Linear equations for the consumption and
saving schedule take the general form
C=a + bY and S=-a+(1-b)Y,where C,S and Y
are consumption,saving and national income
respectively.
(1) Use the given data to develop specific
numerical values for the consumption and
saving equations,Write the using these values,
(2) what is the economic meaning of b? what is
the economic meaning of (1-b)?
01-08-08 2
Household disposal
income (DI)
Consumption (C)
100 90
200 170
01-08-08 3
question
Briefly explain the concept of consumption
function.
Explain how changes in net wealth and the
price level alter the consumption function.
GDP=C+I+G+NX
01-08-08 5
Investment
Investment refers to the expenditures
on new plants,capital equipments,
machinery and so on.
投资指对新工厂、新机器、新设备等的支出。
01-08-08 6
example
Suppose the owner of a small shop is
considering investing a new machine that
costs $1000 and it has a useful life of a
year.
The expected net revenue is $1100,the
net profit is $100.
The expected rate of net profit(预期净利润率 ) is 10 per cent,=(1100-1000)/1000
01-08-08 7
Interest rate(利率 ) ------
the financial cost（财务成本）
If the interest rate is 15% and the expected
rate of net profits is 10%,will it be
profitable to invest?
Of course not.
01-08-08 8
Generalization (总结 )
If the expected rate of net profits exceeds the
interest rate,it will be profitable to invest.(如果预期利润率超过利率，值得投资 )
But if the interest rate exceeds the expected
rate of net profits,it will be unprofitable to
invest.（如果利率超过预期利润率，不值得投资）
01-08-08 9
What if inflation is occurring?
The expected rate of net profits= 10%
The nominal interest rate(名义利率 ) =
15%
the rate of inflation （通货膨胀率）
=8%
Is it profitable to invest?
01-08-08 10
The real interest rate=
The nominal interest rate - the rate
of inflation
实际利率＝名义利率－通货膨胀率
01-08-08 11
Which item is profitable to invest?
Amount of
investment
Expected rate of
net profits
A 100 10%
B 50 8%
C 150 6%
D 100 4%
01-08-08 12
The less the interest rate,the more the
amount of the investment,(利率越低，投资越多，利率越高，投资越少。 )
r
I
Investment demand
curve(投资需求曲线 )
01-08-08 13
Non-interest determinants of
investment demand(影 响 投 资 的非利率因素 )
Acquisition,maintenance and operating
costs(购置成本，维护成本和营业成本 )
Business taxes(营业税 )
Technological change(技术变革 )
The stock of capital goods on hand（资本品的存量）
Expectation(预期 )
01-08-08 14
The investment demand curve plots the
relationship between planned investment
expenditure and
(a) The nominal interest rate
(b) The real interest rate
(c) The price level
(d) The real GDP
01-08-08 15
Equilibrium levels of output and income
(产出和收入的均衡水平 )
１,Expenditures-output approach(支出－产出法 )
AD
Y:GDP
Y=AD
AD
Ye
01-08-08 16
AD=C+I
AD Y=AD
Ye Y:GDP
１,Expenditures-output approach(支出－产出法 )
The condition of equilibrium(均衡条件 ),
Y=AD=C+I
01-08-08 17
question
In a two-sector economy,if the consumption
function is C= 10+0.8Y and planned
investment is $15,the equilibrium expenditure
is
(a)$50
(b)$150
(c)$125
(d)$175
01-08-08 18
2.leakages-injections approach
(漏出 -注入法 )
Saving represents leakage(储蓄代表 漏出 )
Investment represents injections(投资代表 注入 )
01-08-08 19
2.leakages-injections approach
(漏出 -注入法 )
Ye
Condition,I=S
S I
Y:GDP
S
I
equilibrium
01-08-08 20
question
In a two-sector economy,if the consumption
function is C= 10+0.8Y and planned
investment is $15,the equilibrium expenditure
is
(a)$50
(b)$150
(c)$125
(d)$175
01-08-08 21
Case study? 蜜蜂的寓言
18世纪初，一个名叫孟迪维尔的英国医生写了一首题为,蜜蜂的寓言,的讽喻诗。这首诗描述了一群蜜蜂的兴衰史。最初，蜜蜂们追求豪华的生活，浪费成性，结果整个蜂群兴旺发达。后来，
它们在一个“哲学蜂”的劝说下崇尚节约，结果弄得社会衰落，终于被另一个蜂群所消灭。这首诗因为宣扬“浪费有功”，当时被英国中塞克斯郡大陪审团判定为败类作品。但在 200多年后，这部作品却启发凯恩斯建立了以总需求为中心的宏观经济理论。
01-08-08 22
Saving,investment and the paradox
of thrift
If society attempts to save more,will the real
GDP be more or less?
01-08-08 23
Saving,investment and the paradox of
thrift(节约悖论 )
S I
Y:GDP
S2
I
Y2 Y1
S1
Multipliers,government budgets and
net exports(乘数,政府预算和净出口 )
对应教材 P.234
01-08-08 25
1.In a two-sector economy,if the
consumption function is C= 10+0.8Y
and planned investment is $50,
calculate the equilibrium expenditure,
the amount of consumption and
saving,
2.if the planned investment is $100,
calculate the equilibrium expenditure.
01-08-08 26
if the consumption function is
changed to be C= 10+0.9Y and
planned investment is still $50,
calculate the equilibrium expenditure,
the amount of consumption and
saving,
If the investment is added to $90,
calculate the change in equilibrium
expenditure
