1. Macroeconomics
ECN 3102 CHAPTER 4

2. Consumption, Saving, and Investment

3. Chapter Outline Consumption and Saving Investment
Goods Market Equilibrium

4. Consumption and Saving
The importance of consumption and saving
The consumption and saving decision of an individual
Effect of changes in current income
Effect of changes in expected future income
Effect of changes in real interest rate
Fiscal policy

5. Investment Why is investment important The desired capital stock
Changes in the desired capital stock
From the desired capital stock to investment

6. Goods Market Equilibrium
Y = Cd + Id + G
Sd = Y – Cd – G,
Equilibrium where Sd = Id
Shifts of the saving curve
Shifts of the investment curve