National Income Determination Introduction • A key objective of Macroeconomics is to explain GDP growth and its fluctuations • Therefore‚ need to understand the forces that determine GDP (“National Income”) • John Maynard Keynes in his “General Theory of Employment‚ Interest and Money” (1936) developed a model of income determination • Known as Keynesian Theory of Income Determination • Aggregate spending / demand determines the level of aggregate output Concepts and Functions Actual
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cardinal utility Marginal Utility- the added utility derived from increasing consumption of a particular product by one unit holding the consumption of all other goods service constant. Mux= Most marginal utility for each dollar spending. Lecture 2 is not on the website yet This concept of analyzing goals at the margin something we will use throughout this course. Added satisfaction= marginal utility As the price increase the quantity demanded decreases The utility that
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corporation tax. For the consumer‚ this decreases their disposable income that leads to a decrease in consumer demand. For the firms‚ they experience a decrease in profits consequently leading to a decrease in investment. When indirect taxes increase‚ higher prices and lower real income is present. Overall this leads to a decreased aggregate demand through the economic intuition; higher taxes cause decreased disposable income that causes consumption to decrease in the economy‚ consequently decreasing
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(E)? £490bn + £80bn = £570bn (f) Given your answer to (e)‚ and assuming that total household incomes are currently £550bn‚ what will happen to household income? Rise (g) What is the formula for the marginal propensity to withdraw? (W/(Y (h) What are the answers to the following? (Use a number or another term as appropriate.) (i) Y – W = Cd (ii) mpcd + mpw = 1 (iii) 1–mpcd = mpw 2. (a) Assuming that injections are constant at all
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direct increase in the aggregate expenditure (AE) of the economy. This will increase the national income of the economy via a multiplier (k) effect‚ assuming that there is spare capacity. The size of the multiplier effect will depend on the marginal propensity to consume (mpc). MPC measures how much money consumers spend for every unit of additional income they receive‚ and k=1/(1-mpc). The multiplier effect will be as illustrated below: Suppose in an economy‚ the initial increase in G is $100M‚ and the
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1) A Countrys rate of economic growth is important because an economy that grows to slowly fails to raise the living standards of its citizens 2)Related don’t let this happen to you! Use the data for the country of New Finlandia in the following table to calculate the following 2006 4‚568. A] the percentage of real gap per capita between 2006 and 2010 is ____3.92_____% The average annual growth rate in real gap per capita between 2006 and 2010 is _________2_____% 3)The following table gives real
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lower demand for money. b. by decreasing government interest payments‚ which in turn increase taxes‚ lowering disposable income. c. by making alternative‚ nonmonetary assets look relatively less attractive to wealth holders. d. by causing a decrease in the issuance of corporate debt. e. None of the above. 3. An increase in expected inflation causes demand for money to a. fall because of a higher return on alternative assets. b. fall because of a lower return on alternative assets.
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Table of content Explain the function of the choosen International Company..................................................p.3 The global business environment the company operates in. Consider the industry main......p.3 competitions‚ and the biggest challenge The organizational structure of the company..........................................................................p.4 The impact of culture of the chosen business activities around the world..............................p.5 The key
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BUS 802 MODULE 1 NATIONAL OPEN UNIVERSITY OF NIGERIA SCHOOL OF MANAGEMENT SCIENCES COURSE CODE: BUS 802 COURSE TITLE: ECONOMIC THEORY 1 BUS 802 ECONOMIC THEORY COURSE GUIDE BUS 802 ECONOMIC THEORY Course Team Dr. J.O. Onyemaechi (Course Writer/Developer) NOUN Dr. A. O. Fagbemi (Course Editor) Dr. C. I. Okeke (Programme Leader) - NOUN Dr. O. Adenuga (Course Coordinator) - NOUN NATIONAL OPEN UNIVERSITY OF NIGERIA 2 BUS 802 MODULE 1 National Open University of Nigeria Headquarters
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1.Measurement of national income: GDP and three methods of its calculation. GDP – is the value of output produces within the country over a 1-year period. 1. The first method of measuring GDP is to add up the value of all the goods and services produced in the country‚ industry by industry. In other words‚ we focus on firms and add up all their production. This first method is known as the product method. GVA over a year. Exclude taxes on products VAT‚ includes subsidies. (intermediate consumption)
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