Household and Firm Behavior in the Macroeconomy: A Further Look. Households: Consumption and Labor Supply Decisions. Keynes suggested that consumption is a positive function of income, and that high-income households consume a smaller portion of their income than low-income households.
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1. When output rises by 1 percent, the number of jobs does not tend to rise by 1 percent also.
2. Some of the jobs are filled by people who already have one job.
3. The response of the labor force to an increase in output.
animal spirits of entrepreneurs
average propensity to consume (APC)
constrained supply of labor
desired, or optimal, level of inventories
income effect of a wage rate increase
life-cycle theory of consumption
nominal wage rate
nonlabor, or nonwage, income
productivity, or labor productivity
real wage rate
substitution effect of a wage rate increase
unconstrained supply of labor