the aggregate expenditures pertemuan 7 matakuliah: j0594-teori ekonomi tahun: 2009
TRANSCRIPT
THE AGGREGATE EXPENDITURES Pertemuan 7
Matakuliah : J0594-Teori EkonomiTahun : 2009
Bina Nusantara University 3
Consumption and InvestmentSimplifications
Private Closed EconomyPlanned InvestmentInvestment Schedule
r a
nd
i (
pe
rce
nt)
Investment (billions of dollars)
20
8
Real GDP (billions of dollars)
20In
vest
men
t (b
illi
on
s o
f d
oll
ars)
Ig
Investment Demand Curve Investment Schedule
Investment Schedule
ID20
Investment Demand Curve
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Consumption and Investment
• Real Domestic Output• Aggregate Expenditures
– Aggregate Expenditures Schedule• Equilibrium GDP• Disequilibrium• Equilibrium GDP:
C + Ig = GDP
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Consumption and Investment
(1) 40
(2) 45
(3) 50
(4) 55
(5) 60
(6) 65
(7) 70
(8) 75
(9) 80
(10) 85
$375
390
405
420
435
450
465
480
495
510
$-5
0
5
10
15
20
25
30
35
40
20
20
20
20
20
20
20
20
20
20
$395
410
425
440
455
470
485
500
515
530
$-25
-20
-15
-10
-5
0
+5
+10
+15
+20
Increase
Increase
Increase
Increase
Increase
Equilibrium
Decrease
Decrease
Decrease
Decrease
$370
390
410
430
450
470
490
510
530
550
Graphically…
…in Billions of Dollars
(2)Real
DomesticOutput
(andIncome)
(GDP=DI)
(3)Con-
sump-tion(C)
(4)Saving (S)
(1-2)
(5)Investment
(Ig)
(6)Aggregate
Expenditures(C+Ig)
(7)UnplannedChanges inInventories
(+ or -)
(8)Tendency ofEmploymentOutput and
Income
(1)Employ-
ment
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Consumption and Investment530
510
490
470
450
430
410
390
370
45°
370 390 410 430 450 470 490 510 530 550
Disposable Income (billions of dollars)
Co
nsu
mp
tio
n (
bill
ion
s o
f d
olla
rs) C
Ig = $20 Billion
AggregateExpenditures
C = $450 Billion
C + Ig(C + Ig = GDP)
EquilibriumPoint
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Other Features of Equilibrium GDP
– Saving Equals Planned Investment
• Leakage
• Injection
– No Unplanned Changes in Inventories
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Changes in Equilibrium GDP and the multiplier
510
490
470
450
430
45°
430 450 470 490 510
Real GDP (billions of dollars)
Ag
gre
gat
e E
xpen
dit
ure
s (b
illio
ns
of
do
llars
)
Increase inInvestment
(C + Ig)0
Decrease inInvestment
(C + Ig)2
(C + Ig)1
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Adding International Trade
• Net Exports and Aggregate Expenditures
• Net Exports Schedule• Net Exports and Equilibrium GDP
– Positive Net Exports– Negative Net Exports
• International Economic Linkages– Prosperity Abroad– Tariffs– Exchange Rates
Bina Nusantara University 10RealGDP
+5
0
-5
Net
Exp
ort
s X
n(b
illi
on
s o
fD
oll
ars
)
Real GDP (billions of dollars)
Ag
gre
gat
e E
xpen
dit
ure
s(b
illi
on
s o
f d
oll
ars
)
510
490
470
450
43045°
430 450 470 490 510
AggregateExpenditureswith PositiveNet Exports
C + Ig
AggregateExpenditureswith NegativeNet Exports
C + Ig+Xn2
C + Ig+Xn1
Xn1
Xn2
Positive Net Exports
Negative Net Exports
450 470 490
International Trade Net Exports and Equilibrium GDP
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Adding The Public Sector
(1)Level ofOutput
andIncome
(GDP=DI)
(2)Consu
mp-tion(C)
(3)Saving (S)
(4)Investment
(Ig)
(5)Net Exports
(Xn) (6)Government
(G)
(7)Aggregate
Expenditures(C+Ig+Xn+G)
(2)+(4)+(5)+(6)
Exports(X)
Imports(M)
(1) $370
(2) 390
(3) 410
(4) 430
(5) 450
(6) 470
(7) 490
(8) 510
(9) 530
(10) 550
$375
390
405
420
435
450
465
480
495
510
$-5
0
5
10
15
20
25
30
35
40
$20
20
20
20
20
20
20
20
20
20
10
10
10
10
10
10
10
10
10
10
20
20
20
20
20
20
20
20
20
20
$415
430
445
460
475
490
505
520
535
550
10
10
10
10
10
10
10
10
10
10
…in Billions of Dollars
Government Purchases and GDP
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Adding The Public Sector
45°
470 550
Real GDP (billions of dollars)
Ag
gre
gat
e E
xpen
dit
ure
s (b
illi
on
s o
f d
oll
ars) C
GovernmentSpending of$20 Billion
C + Ig + Xn
C + Ig + Xn + G
$20 Billion Increasein GovernmentSpending Yields an$80 Billion IncreaseIn GDP
Government Spending and GDP