INCOME AND CONSUMPTION

GDP NET DI C STAXES

0 0 0 30 -30100 30 70 86 -16150 45 105 114 -9200 60 140 142 -2250 75 175 170 5300 90 210 198 12350 105 245 226 19400 120 280 254 26450 135 315 282 33500 150 350 310 40550 165 385 338 47

INCOME AND CONSUMPTION

RELATIONSHIPS

• GDP * .3 = net taxes • Disposable Income = GDP - net taxes• DI = GDP - .3* GDP• Consumption = 30 + .8 *DI• C = 30 + .8 *(GDP - .3*GDP)• C=30+.8*(1-.3)*GDP = 30 + .56 GDP• Savings = DI - C• Savings = -30 + .2 *DI

CONSUMPTION FUNCTIONDI

-100-50

050

100150200250300350400450

0 50 100 150 200 250 300 350 400 450

DISPOSABLE INCOME

CONSUMPTION FUNCTION GDP

-100

0

100

200

300

400

500

600

700

0 100 200 300 400 500 600 700

GDP

AVERAGE PROPENSITIES

PDY C S APC APS

70 86 -16 1.23 -0.23105 114 -9 1.09 -0.09140 142 -2 1.01 -0.01175 170 5 0.97 0.03210 198 12 0.94 0.06245 226 19 0.92 0.08280 254 26 0.91 0.09315 282 33 0.90 0.10350 310 40 0.89 0.11385 338 47 0.88 0.12

MARGINAL PROPENSITIESCHANGE CHANGE MPC CHANGE MPSC PDY S

28 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.228 35 0.8 7 0.2