chapter 9 - arts & sciences pages · © 2014 pearson education, inc. 1-2 chapter 9 topics •...
TRANSCRIPT
![Page 1: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/1.jpg)
Chapter 9 A Two-Period Model: The
Consumption-Savings
Decision and Credit
Markets
Copyright © 2014 Pearson Education, Inc.
![Page 2: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/2.jpg)
1-2 © 2014 Pearson Education, Inc.
Chapter 9 Topics
• Consumer’s consumption/savings decision – responses of consumer to changes in income and interest rates.
• Government budget deficits and the Ricardian Equivalence Theorem.
![Page 3: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/3.jpg)
1-3 © 2014 Pearson Education, Inc.
Budget Constraints
The consumer’s current-period budget constraint:
tysc −=+
![Page 4: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/4.jpg)
1-4 © 2014 Pearson Education, Inc.
Budget Constraints
The consumer’s future-period budget constraint:
srtyc )1(''' ++−=
![Page 5: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/5.jpg)
1-5 © 2014 Pearson Education, Inc.
Simplify
Solve the future-period budget constraint for s:
rtycs
+
+−=1
'''
![Page 6: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/6.jpg)
1-6 © 2014 Pearson Education, Inc.
Next,
• Substitute in the current-period budget constraint obtaining lifetime budget constraint:
ty
rtycc −=
+
+−+1
'''
![Page 7: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/7.jpg)
1-7 © 2014 Pearson Education, Inc.
Consumer’s Lifetime Budget Constraint
• Substitute in the current-period budget constraint obtaining lifetime budget constraint:
r
tytyrcc
+
−+−=
++
1''
1'
![Page 8: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/8.jpg)
1-8 © 2014 Pearson Education, Inc.
Consumer’s Lifetime Wealth
rtytywe
+
−+−=1
''
![Page 9: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/9.jpg)
1-9 © 2014 Pearson Education, Inc.
Simplified Lifetime Budget Constraint
wercc =+
+1'
![Page 10: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/10.jpg)
1-10 © 2014 Pearson Education, Inc.
Simplified Lifetime Budget Constraint: Slope-Intercept
)1()1(' rwecrc +++−=
![Page 11: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/11.jpg)
1-11 © 2014 Pearson Education, Inc.
Figure 9.1 Consumer’s Lifetime Budget Constraint
![Page 12: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/12.jpg)
1-12 © 2014 Pearson Education, Inc.
Figure 9.2 A Consumer’s Indifference Curves
![Page 13: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/13.jpg)
1-13 © 2014 Pearson Education, Inc.
Optimization
• Marginal condition that holds when the consumer is optimizing:
rMRS cc +=1',
![Page 14: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/14.jpg)
1-14 © 2014 Pearson Education, Inc.
Figure 9.3 A Consumer Who Is a Lender
![Page 15: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/15.jpg)
1-15 © 2014 Pearson Education, Inc.
Figure 9.4 A Consumer Who Is a Borrower
![Page 16: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/16.jpg)
1-16 © 2014 Pearson Education, Inc.
An Increase in Current Income for the Consumer
• Current and future consumption increase. • Saving increases. • The consumer acts to smooth consumption over time.
![Page 17: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/17.jpg)
1-17 © 2014 Pearson Education, Inc.
Figure 9.5 The Effects of an Increase in Current Income for a Lender
![Page 18: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/18.jpg)
1-18 © 2014 Pearson Education, Inc.
Observed Consumption-Smoothing Behavior
• Aggregate consumption of non-durables and services is smooth relative to aggregate income, but the consumption of durables is more volatile than income.
• This is because durables consumption is economically more like investment than consumption.
![Page 19: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/19.jpg)
1-19 © 2014 Pearson Education, Inc.
Figure 9.6 Percentage Deviations from Trend in Consumption of Durables and Real GDP
![Page 20: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/20.jpg)
1-20 © 2014 Pearson Education, Inc.
Figure 9.7 Percentage Deviations from Trend in Consumption of Nondurables and Services and Real GDP
![Page 21: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/21.jpg)
1-21 © 2014 Pearson Education, Inc.
An Increase in Future Income for the Consumer
• Aggregate consumption of non-durables and services is smooth relative to aggregate income, but the consumption of durables is more volatile than income.
• This is because durables consumption is economically more like investment than consumption.
![Page 22: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/22.jpg)
1-22 © 2014 Pearson Education, Inc.
Figure 9.8 An Increase in Future Income
![Page 23: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/23.jpg)
1-23 © 2014 Pearson Education, Inc.
Temporary and Permanent Increases in Income
• As a permanent increase in income will have a larger effect on lifetime wealth than a temporary increase, there will be a larger effect on current consumption.
• A consumer will tend to save most of a purely temporary income increase.
![Page 24: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/24.jpg)
1-24 © 2014 Pearson Education, Inc.
Figure 9.9 Temporary Versus Permanent Increases in Income
![Page 25: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/25.jpg)
1-25 © 2014 Pearson Education, Inc.
Figure 9.10 Stock Price Index and the Consumption of Nondurables and Services
![Page 26: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/26.jpg)
1-26 © 2014 Pearson Education, Inc.
Figure 9.11 Scatter Plot: Consumption of Nondurables and Services vs. Stock Price Index
![Page 27: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/27.jpg)
1-27 © 2014 Pearson Education, Inc.
Figure 9.12 An Increase in the Real Interest Rate
![Page 28: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/28.jpg)
1-28 © 2014 Pearson Education, Inc.
An Increase in the Market Real Interest Rate
• An increase in the market real interest rate decreases the relative price of future consumption goods in terms of current consumption goods – this has income and substitution effects for the consumer.
![Page 29: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/29.jpg)
1-29 © 2014 Pearson Education, Inc.
Figure 9.13 An Increase in the Real Interest Rate for a Lender
![Page 30: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/30.jpg)
1-30 © 2014 Pearson Education, Inc.
Figure 9.14 An Increase in the Real Interest Rate for a Borrower
![Page 31: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/31.jpg)
1-31 © 2014 Pearson Education, Inc.
Effects of an Increase in the Real Interest Rate for a Lender
![Page 32: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/32.jpg)
1-32 © 2014 Pearson Education, Inc.
Effects of an Increase in the Real Interest Rate for a Borrower
![Page 33: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/33.jpg)
1-33 © 2014 Pearson Education, Inc.
Perfect Complements Example
• With perfect complements, the ratio of future consumption to current consumption is constant.
• The consumer’s budget constraint must hold.
acc ='
wercc =+
+1'
![Page 34: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/34.jpg)
1-34 © 2014 Pearson Education, Inc.
Perfect Complements Example
• With perfect complements we can solve explicitly for current and future consumption:
arrawec
arrwec
++
+=
++
+=
1)1('
1)1(
![Page 35: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/35.jpg)
1-35 © 2014 Pearson Education, Inc.
Perfect Complements Example
⎥⎦
⎤⎢⎣
⎡++
−++−=
++
−++−=
artyrtyac
artyrtyc
1'')1)(('
1'')1)((
Substituting for lifetime wealth gives:
![Page 36: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/36.jpg)
1-36 © 2014 Pearson Education, Inc.
Figure 9.15 Example with Perfect Complements Preferences
![Page 37: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/37.jpg)
1-37 © 2014 Pearson Education, Inc.
Government Budget Constraints
The government’s current-period budget constraint:
BTG +=
![Page 38: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/38.jpg)
1-38 © 2014 Pearson Education, Inc.
Government Budget Constraints
The government’s future-period budget constraint:
')1(' TBrG =++
![Page 39: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/39.jpg)
1-39 © 2014 Pearson Education, Inc.
Government Budget Constraints
The government’s present-value budget constraint:
rTT
rGG
++=
++
1'
1'
![Page 40: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/40.jpg)
1-40 © 2014 Pearson Education, Inc.
Credit Market Equilibrium Condition
• Total private savings is equal to the quantity of government bonds issued in the current period.
BS p =
![Page 41: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/41.jpg)
1-41 © 2014 Pearson Education, Inc.
Income-Expenditure Identity
• Credit market equilibrium implies that the income-expenditure identity holds.
GCY +=
![Page 42: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/42.jpg)
1-42 © 2014 Pearson Education, Inc.
Ricardian Equivalence
• The Ricardian Equivalence Theorem is illustrated algebraically, numerically, and in two graphs.
![Page 43: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/43.jpg)
1-43 © 2014 Pearson Education, Inc.
Ricardian Equivalence
• Key equation: The consumer’s lifetime tax burden is equal to the consumer’s share of the present value of government spending – the timing of taxation does not matter for the consumer.
⎟⎠
⎞⎜⎝
⎛+
+=+
+r
GGNr
tt1'1
1'
![Page 44: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/44.jpg)
1-44 © 2014 Pearson Education, Inc.
Ricardian Equivalence
• Then, substitute in the consumer’s budget constraint – taxes do not matter in equilibrium for the consumer’s lifetime wealth, just the present value of government spending.
![Page 45: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/45.jpg)
1-45 © 2014 Pearson Education, Inc.
Figure 9.16 Ricardian Equivalence with a Cut in Current Taxes for a Borrower
![Page 46: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/46.jpg)
1-46 © 2014 Pearson Education, Inc.
Figure 9.17 Ricardian Equivalence and Credit Market Equilibrium
![Page 47: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/47.jpg)
Figure 9.18 Perfect Substitutes, MRSl,C <1 + r.
1-47 © 2014 Pearson Education, Inc.
![Page 48: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/48.jpg)
Figure 9.19 Perfect Substitutes, MRSl,C <1 + r.
1-48 © 2014 Pearson Education, Inc.
![Page 49: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/49.jpg)
Figure 9.20 Competitive Equilibrium in the Example
1-49 © 2014 Pearson Education, Inc.
![Page 50: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/50.jpg)
Figure 9.21 Total Government Surplus for the United States
1-50 © 2014 Pearson Education, Inc.
![Page 51: Chapter 9 - Arts & Sciences Pages · © 2014 Pearson Education, Inc. 1-2 Chapter 9 Topics • Consumer’s consumption/savings decision – responses of consumer to changes in income](https://reader033.vdocument.in/reader033/viewer/2022042322/5f0bf2ef7e708231d4330399/html5/thumbnails/51.jpg)
Figure 9.22 Total government Debt (federal, state, and local)
1-51 © 2014 Pearson Education, Inc.