New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Macroeconomics 3/18/2016 and 3/21/2016

by: amber weiss

Macroeconomics 3/18/2016 and 3/21/2016 Economics 111

Marketplace > Southern Illinois University Edwardsville > Economcs > Economics 111 > Macroeconomics 3 18 2016 and 3 21 2016
amber weiss
GPA 3.7

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Here are the notes for the following classes... Friday March 18, 2016 Monday March 21, 2016
Mary Anne Pettit
75 ?




Popular in Macroeconomics

Popular in Economcs

This 3 page Bundle was uploaded by amber weiss on Monday March 21, 2016. The Bundle belongs to Economics 111 at Southern Illinois University Edwardsville taught by Mary Anne Pettit in Spring 2016. Since its upload, it has received 16 views. For similar materials see Macroeconomics in Economcs at Southern Illinois University Edwardsville.


Reviews for Macroeconomics 3/18/2016 and 3/21/2016


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 03/21/16
Macroeconomics 3/18/2016  GDP= C + I + G + (Xg – M ) - C  Consumer Spending - I  Investment Spending  This is NOT Buying Stocks and Bonds  Spending by Businesses (mostly) 1. New tools, equipment, machinery, factories (new capital) 2. Residential Spending – (buying a new home) 3. Changes in Inventory - G  Government Spending  Spending by all levels of government  Excludes transfer payments (purely financial transactions) - Exports (gross Xg) :  Our stuff to others - Imports (M) :  Their stuff to us  Components of GDP - Consumptions - Consumer spending Is the biggest component of total spending 70 – 75% - Spending by households on: 1. Durable goods: 11% - goods that last 1-3 years computers, cars, appliances, cell phones, electronics, instruments, and books 2. Nondurables : 29% - consumables – less than a year : food, alcohol, tobacco, toiletries, medication, fuel products 3. Services : 60% - things you pay to do for you : legal services, personal grooming, home repair services, restaurants, car services  Factors that determine consumption 1. Income - Income is the most important determinant of consumer spending remember circular flow of economic activity - Output = income - Producing stuff generates income for people- consumers, businesses, and governments - Disposable income : income after savings - Disposable income: consumption + saving - Saving is not spending Macroeconomics 3/21/2016  Factors that determine consumption … Continued - Consumer spending 1. Income (continued…)  Disposable income: income after taxes  Disposable income = consumption + saving  More income means more consumption and more saving (less income = less of both) 2. Prices (Walmart and gas prices)  Higher prices reduce consumption  Lower prices increase consumption  You feel “richer” with LOWER prices 3. Wealth Effects: amount of accumulated wealth a person has will (may? Should?) affect a person’s ability and willingness to spend now  Changes in wealth can change consumer behavior  Wealth: value of financial assets such as stock portfolios and retirement accounts and value of real assets - - your home, car  VERY IMPORTANT: The best measure of wealth is net-worth- value of assets (home, bank, accounts, portfolio, etc.) MINUS liabilities (claims) {mortgages credit card, debt, loans – school? Car?}  Important accounting tool: balancing sheet Assets Liability (bank claim) and Owners equity 1) $200,000 $200,000 - “0” 2) $300,000 $200,000 3) $200,000 $200,000 - OWE $100,000 Asset example: VALUE OF HOME = $200,000 Liability: VALUE OF MORTGACE LOAN = $200,000 Assume you buy a home for $200,000 and borrow $200,000  Wealth effects using balance sheet 1. Home purchased using mortgage loan - Owner equity = 0 2. Assume home prices rise - Home equity loan or Second Mortgage ($100,000) 3. Home Prices Fall - You owe more than value of home {upside down or under water} 4. Credit Conditions - Availability of credit and interest rates, impact how much households spend- - Easy credit and low rates encourage consumption - Tight credit and high rates discourage consumption 5. Taxes- change disposable income - Increase taxes decrease consumption - Decrease taxes increase consumption 6. Expectations


Buy Material

Are you sure you want to buy this material for

75 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Anthony Lee UC Santa Barbara

"I bought an awesome study guide, which helped me get an A in my Math 34B class this quarter!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.