User:Nick Gardner /Sandbox: Difference between revisions

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&nbsp;&nbsp;&nbsp;&nbsp;P&nbsp;=&nbsp;the price level<br>
&nbsp;&nbsp;&nbsp;&nbsp;P&nbsp;=&nbsp;the price level<br>
&nbsp;&nbsp;&nbsp;&nbsp;M&nbsp;=&nbsp;the money supply<br>
&nbsp;&nbsp;&nbsp;&nbsp;M&nbsp;=&nbsp;the money supply<br>
&nbsp;&nbsp;&nbsp;&nbsp;l&nbsp;=&nbsp;<br>
&nbsp;&nbsp;&nbsp;&nbsp;l&nbsp;=&nbsp;the income elasticity of demand for money<br>
&nbsp;&nbsp;&nbsp;&nbsp;L&nbsp;=&nbsp;<br>
&nbsp;&nbsp;&nbsp;&nbsp;L&nbsp;=&nbsp;the interest elasticity of demand for money<br>


then:-<br>
then:-<br>


The demand for money
The demand for money
:::::: M&nbsp;=&nbsp;lPy&nbsp;+&nbsp;L(y)
:::::: M&nbsp;=&nbsp;lPy&nbsp;+&nbsp;L(r) &nbsp;&nbsp;------------------------&nbsp;(1)
 


The consumption function
The consumption function
::::::  s&nbsp;=&nbsp;s(y)
::::::  s&nbsp;=&nbsp;s(y)&nbsp;&nbsp;&nbsp;--------------------------------&nbsp;(2)
 
 


The production function
The production function
::::::y&nbsp;=&nbsp;y(n)
::::::y&nbsp;=&nbsp;y(n)&nbsp;&nbsp;------------------------------------&nbsp;(3)
 
 


The labour market
The labour market
::::::dy/dn&nbsp;=&nbsp;W/P
::::::dy/dn&nbsp;=&nbsp;W/P&nbsp;&nbsp;-------------------------------&nbsp;(4)
 


Investment
Investment
::::::i&nbsp;=&nbsp;i(r)
::::::i&nbsp;=&nbsp;i(r)&nbsp;&nbsp;---------------------------------------&nbsp;(5)
 


Savings
Savings
::::::s&nbsp;=&nbsp;i
::::::s&nbsp;=&nbsp;i&nbsp;&nbsp;------------------------------------------&nbsp;(6)
 


Sticky wages
Sticky wages
::::::W&nbsp;=W<sub>o,<sub>
::::::W&nbsp;=W<sub>o,<sub>&nbsp;&nbsp;---------------------------------------------------&nbsp;(7)

Revision as of 06:06, 21 November 2009

 

The Keynesian equation system

Let:-
    y = the thenational income
    N = numbers employed
    W = the money wage
    P = the price level
    M = the money supply
    l = the income elasticity of demand for money
    L = the interest elasticity of demand for money

then:-

The demand for money

M = lPy + L(r)   ------------------------ (1)


The consumption function

s = s(y)   -------------------------------- (2)


The production function

y = y(n)  ------------------------------------ (3)


The labour market

dy/dn = W/P  ------------------------------- (4)


Investment

i = i(r)  --------------------------------------- (5)


Savings

s = i  ------------------------------------------ (6)


Sticky wages

W =Wo,  --------------------------------------------------- (7)
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