ECSENOMICS Chapter 22 Consumption and Investment McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 22 Consumption and Investment
ECSENOMICS What Are the Major Forces Affecting Consumption and Investment? 1-157 Figure 22-1 Aggregate cmand Consump Investment Interaction ol AS and AD Aggregate McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. T-157 Figure 22-1 What Are the Major Forces Affecting Consumption and Investment?
ECSENOMICS Family Budget Expenditures Show Regular patterns 1-158 Figure 22-2 100.000 80.000 000 Medical and other 40.000 Transportation 20.000 Housing 0 20.000 40.000 60.000 80 000 100.000 McGraw-Hilllrwin ource: U.S. De partment of Labor, Consumer Expenditure Survey: Interview Survey 1984
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Family Budget Expenditures Show Regular Patterns T-158 Figure 22-2 Source: U.S. Department of Labor, Consumer Expenditure Survey: Interview Survey 1984, August 1986, updated to 2000 prices by authors
ECSENOMICS A Plot of the Consumption Function 1-159 Figure 22-3 Consumption 28,00 G fu 26,000 4,000 Consumption 22.000 20,000 20.00022.00024.00026.0002800030,000 Dis pos a ble income (dollars McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. A Plot of the Consumption Function T-159 Figure 22-3
ECSENOMICS The Saving Function Is the Mirror Sy Image of the Consumption Function T-160 Figure 22-4 3,000 2,000 F E 1,000 三 B Saving 0 1,000 L 20,00022,00024,00026,00028,00030,000 Dis posable income(dollars) McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. The Saving Function Is the Mirror Image of the Consumption Function T-160 Figure 22-4
ECSENOMICS The Slope of the Consumption Function Is Its MPo T-161 Figure 22-5 30.000 28.000 26.000 B S850 s1.000 824.000 22,000 20.000 20.00022.00024.00026.00028.00030.000 Disposable income (dollars) McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. The Slope of the Consumption Function Is Its MPC T-161 Figure 22-5
ECSENOMICS Consumption and Disposable Income,1929-1999 T-162 Figure 22-6 7,000 6,O0 5,000 4,000 Disposable income 3,000 Consumption 1930 1940 1950 1970 1980 1990 2000 can McGraw-Hilllrwin Source: U.S. Department of Commerce
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Consumption and Disposable Income, 1929-1999 T-162 Figure 22-6 Source: U.S. Department of Commerce
ECSENOMICS A Consumption Function for the United States 1966-1999 1-163 Figure 22-7 2,000 4.00 5,000 6,O00 Disposable income (billions of 1996 dollars) McGraw-Hilllrwin Source: U.S. Department of Commerce
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. A Consumption Function for the United States, 1966-1999 T-163 Figure 22-7 Source: U.S. Department of Commerce
ECSENOMICS Two Measures of the Personal Saving rate T-164 Figure 22-8 National-accounts savin Balance- sheet saving rate 1900-69 1970-79 198089 1990.9 Decade McGraw-Hilllrwin Source: william G. Gale and John Sabe lhaus, "Pe rspectives on the Household Saving Rate, Brookings Papers on Economic Activity, no. 1, 1999; and U.S. De partment of Commere
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Two Measures of the Personal Saving Rate T-164 Figure 22-8 Source: William G. Gale and John Sabelhaus, “Perspectives on the Household Saving Rate,” Brookings Papers on Economic Activity, no. 1, 1999; and U.S. Department of Commerce
ECSENOMICS Investment Depends upon Interest Rate T165 Figure 22-9 20 三EEE5E Demand-for-investment schedule 10 M 10203040506070 Investment spending(millions of dollars) McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Investment Depends upon Interest Rate T-165 Figure 22-9