Supply Side Model = Production Function

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Presentation transcript:

Supply Side Model = Production Function Chapter 3 - Witte Supply Side Model = Production Function (constant returns to scale) Factor Prices

Firms = Profit Maximizers Chapter 3 - Witte Firms = Profit Maximizers Diminishing Marginal Returns, MPK, MPL

Real Economic Profit Euler’s Theorem Labor Productivity Chapter 3 - Witte Real Economic Profit Euler’s Theorem Labor Productivity

Cobb-Douglas Production Function Chapter 3 - Witte Cobb-Douglas Production Function

Demand Side Economics: Y = C + I + G + NX Chapter 3 - Witte Demand Side Economics: Y = C + I + G + NX C = A + MPC(Y-T) I = I(r)

Chapter 3 - Witte G = G(?) Budget Balance Y =

Market for Loanable Funds Chapter 3 - Witte National Savings = S Market for Loanable Funds

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