Chapter 3. National Income: Where it Comes From, Where it Goes Homework: p #1, 4a c, d; 10 macromodel: equilibrium_interest_rate 1, 3, 7 Won’t be responsible for the appendix. Link to syllabussyllabus

Fig. 3-1 p. 48. Circular Flow

Fig. 3-2 p. 54.The determination of the earnings of a factor of production.

Fig. 3-3 p. 56. The Slope of the Production Function.

Fig. 3-4 p. 56. The Marginal Product of Labor

Figure 3-5 p. 61. The ratio of labor income to total income In earlier edition, was in Appendix as Fig p. 73

Karabarbounis QJE 2014

Income Composition of Top Groups within the Top Decile, 1929 and 1998 (Piketty, QJE 2003)

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

Fig. 3-6, p. 65. The Consumption Function

Fig. 3-7 p. 66. The Investment Function

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 FedFed

Fig. 3-8 p. 71. Savings, Investment, and the Real Interest Rate

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.

Fig p. 73. Military Spending and Interest Rates in the U.K.

Fig p. 75. An Increase in Investment Demand: Fixed Savings

Fig p. 76 Increase in Investment Demand with Savings Responding to Interest Rates

Equilibrium in the Loanable Funds Market. Fig 10-4 p. 284 Econ 201 text: Krugman and Wells

Fig 15-3, p Equilibrium in the Money Market Econ 201 text: Krugman/Wells

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.

Appendix

Fig. 3-12, p. 67. The Identification Problem