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Analyzing the Keynesian Consumption Function and Investment Demand Dynamics

This chapter explores the Keynesian model focusing on the consumption function and its implications for economic analysis. It includes two marginal propensities to consume, historical data on U.S. personal consumption and disposable income (1933-2003), and a comparison of the volatility of real investment versus real consumption from 1965 to 2003. Key concepts such as movement along the consumption function, shifts in investment demand, and aggregate expenditures are presented with data sourced from the Bureau of Economic Analysis, enhancing our understanding of consumer behavior and investment dynamics.

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Analyzing the Keynesian Consumption Function and Investment Demand Dynamics

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  1. CHAPTER The Keynesian Model 18

  2. EXHIBIT 2 THE CONSUMPTION FUNCTION

  3. CONSUMPTION FUNCTIONS FOR TWO MARGINAL PROPENSITIES TO CONSUME EXHIBIT 4

  4. U.S. PERSONAL CONSUMPTION AND DISPOSABLE INCOME, 1933–2003 EXHIBIT 5 Source: Bureau of Economic Research, http://www.bea.doc.gov/bea/dn/nipaweb/SelectTable.asp?Selected-N.

  5. MOVEMENT ALONG AND SHIFTS IN THE CONSUMPTION FUNCTION EXHIBIT 6

  6. A COMPARISON OF THE VOLATILITY OF REAL INVESTMENT AND REAL CONSUMPTION, 1965–2003 EXHIBIT 7 Source: Bureau of Economic Analysis, http://www.bea.doc/bea/dn/nipaweb/SelectTable.asp?Selected=N, Table 1.1.1.

  7. MOVEMENT ALONG AND A SHIFT IN A FIRM’S INVESTMENT DEMAND EXHIBIT 8

  8. THE AGGREGATE INVESTMENT DEMAND AND AUTONOMOUS INVESTMENT DEMAND CURVES EXHIBIT 9

  9. EXHIBIT 10 AGGREGATE EXPENDITURES FUNCTION DATA

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