Chapter 8 - Building the aggregate expenditure model. In this chapter you will learn: The factors that determine consumption expenditure and saving, the factors that determine investment spending, how equilibrium GDP is determined in a closed economy without a government sector, about the effects of the multiplier on changes in equilibrium GDP,…
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Consider these facts. The average college student graduates owing almost $20,000 in student loans. In addition, nearly 10 percent of undergraduates owe more than $7,000 in credit card debt. Young Americans aged 15-25 filed bankruptcy at a record rate in 2000, accounting for nearly 7 percent of the nation's personal bankruptcies. Clearly, young people today need help managing their money better.
carbon dioxide recovery systems In the fermentation process, the yeast feeds on the wort to produce carbon dioxide and alcohol. This carbon dioxide can be recovered with closed fermentation tanks and used later in the carbonation process. The fermentation process generates about 8-10 lbs/barrel wort (3-4 kg CO2/hl) (Lom and Associates, 1998). Typical CO2 scrubber operations require 2 kg of water per kg of carbon dioxide (Dell, 2001). A large brewery can become self-sufficient for CO2 if a well-designed plant is installed to recover CO2 from fermentation. The U.S.
China’s fiscal system has gone through three basic phases. Before 1979, the
central government had a formal monopoly over both revenues and expenditures.
Between 1979 and 1993, under the economic reforms championed by Deng Xiaoping and
his supporters, this fiscal system changed to a fiscal contract system, but there were at
least six different types of contracts between provinces and the center, and little
consistency between provinces or over time.
Engineering projects typically require the expenditure of funds for implementation and in return provide a savings or increased income to the firm. In this sense an engineering project is an investment
for the firm and must be analyzed as an investment
Budgets never work out exactly – some things cost more,
occasionally less than you think. If you can convince those
who are providing the money, try to build in an extra 5%
for “unforeseen expenditure”
Budgets never work out exactly; you need to be flexible,
perhaps saving in one area to cover extra costs in another
If you are over budget, don’t try to hide the facts – present
the problem as clearly as you can to those in charge
Build in a financial review into every progress review
In a simple world of full Ricardian Equivalence, households increase their savings by the
present value of future taxes needed to repay government debt. Their desired bond holdings
thus rise by the exact increase in government debt issuance. Private consumption declines
to offset the increase in public expenditure, leaving GDP unchanged. The long-term interest
rate therefore remains constant.
In this stylised view, changes of the government debt/GDP
ratio should not affect the future path of interest rates, nominal or real, in any way at all.
The military health system, as well as the private health care sector, has experienced rapid growth in pharmaceutical expenditures. In 2002 alone, the Department of Defense spent about $3 billion on outpatient pharmacy benefits. As part of an effort to redesign the TRICARE pharmacy benefit to save costs, the Department
These are usually cost reimbursement contracts as (d) above, but with an esti-
mated target cost set for the works cost, and a fixed or percentage fee for
the contractor’s head office overheads and profit. If the contractor’s expenditure
exceeds the target he has to bear a proportion of the excess; if his expenditure is
less than target he receives a proportion of the difference as a bonus. Thus
there is a financial incentive to the contractor to be efficient and save costs.
A key factor for the impact of cloud computing is the size of fixed cost savings.
The business literature emphasizes large savings. Dubey and Wagle (2007) conjec-
ture large reductions in the cost of ownership for typical business services.
(2003) suggests that about half of capital expenditure of modern firms is ICT re-
lated. While this maybe true in a number of sectors and for advanced companies,
we prefer to adopt a more conservative assumption for our macroeconomic investi-
Accounting relationships state definite facts about the world in relational
terms. In particular, the national income identity (which simply states that total
expenditure is the sum of its components)
implies, without need for further proof,
that there is a reciprocal, offsetting relationship between public deficits and private
savings. To be precise, the financial balance of the private sector (the excess of
domestic saving over domestic investment) must always just equal the sum of the
government budget deficit and the net export surplus.