chapter 3. national income: where it comes from, where it goes
DESCRIPTION
Chapter 3. National Income: Where it Comes From, Where it Goes. Homework: p. 78-79 #1, 4a c, d; 10 macromodel : equilibrium_interest_rate 1, 3, 7 Won’t be responsible for the appendix. Link to syllabus. Fig. 3-1 p. 48. Circular Flow. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/1.jpg)
Chapter 3. National Income: Where it Comes From, Where it Goes
Homework: p. 78-79 #1, 4a c, d; 10 macromodel: equilibrium_interest_rate 1, 3, 7
Won’t be responsible for the appendix.
Link to syllabus
![Page 2: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/2.jpg)
Fig. 3-1 p. 48. Circular Flow
![Page 3: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/3.jpg)
Fig. 3-2 p. 54.The determination of the earnings of a factor of production.
![Page 4: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/4.jpg)
Fig. 3-3 p. 56. The Slope of the Production Function.
![Page 5: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/5.jpg)
Fig. 3-4 p. 56. The Marginal Product of Labor
![Page 6: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/6.jpg)
Figure 3-5 p. 61. The ratio of labor income to total income
In earlier edition, was in Appendix as Fig. 3-13 p. 73
![Page 7: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/7.jpg)
Karabarbounis QJE 2014
![Page 8: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/8.jpg)
Income Composition of Top Groups within the Top Decile, 1929 and 1998 (Piketty, QJE 2003)
![Page 9: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/9.jpg)
Table 3-1 p. 63. Growth in Labor Productivity and Real Wages in the US
Point is that these two move together, implying that productivity is the major determinant of wage income
![Page 10: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/10.jpg)
Fig. 3-6, p. 65. The Consumption Function
![Page 11: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/11.jpg)
Fig. 3-7 p. 66. The Investment Function
![Page 12: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/12.jpg)
The prime interest rate and the Federal funds rate
Different text
Parallels the textbook’s discussion on page 67.
Link to data from the Minneapolis Fed
![Page 13: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/13.jpg)
Fig. 3-8 p. 71. Savings, Investment, and the Real Interest Rate
![Page 14: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/14.jpg)
Fig. 3-9 p. 72. A Reduction in Saving
Gov’t spends more, National Savings declines, interest rates rise,private investment falls. “Crowding Out.” Bad guy.
![Page 15: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/15.jpg)
Fig. 3-10 p. 73. Military Spending and Interest Rates in the U.K.
![Page 16: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/16.jpg)
Fig. 3-11 p. 75. An Increase in Investment Demand: Fixed Savings
![Page 17: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/17.jpg)
Fig. 3-12 p. 76 Increase in Investment Demand with Savings Responding to Interest Rates
![Page 18: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/18.jpg)
Equilibrium in the Loanable Funds Market. Fig 10-4 p. 284Econ 201 text: Krugman and Wells
![Page 19: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/19.jpg)
Fig 15-3, p. 454. Equilibrium in the Money MarketEcon 201 text: Krugman/Wells
![Page 20: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/20.jpg)
Homework Problems P. 76
#1.In neoclassical model, how do these affect real wage and rental price of capital? a). Wave of immigrants. b. Earthquake destroys capital. C. Tech change
#3. Changes in incomes of farmers and barbers (unskilled manual work):If Farmers have productivity gains, and barbers do not
#9. If consumption (and therefore saving) depend on interest rate, how does that affect analysis of fiscal policy.
![Page 21: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/21.jpg)
![Page 22: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/22.jpg)
Appendix
![Page 23: Chapter 3. National Income: Where it Comes From, Where it Goes](https://reader035.vdocuments.us/reader035/viewer/2022081503/56815f0f550346895dcdcfac/html5/thumbnails/23.jpg)
Fig. 3-12, p. 67. The Identification
Problem