What is permenant income?
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THE AVERAGE INCOME OF THE HOUSEHOLD
ACCORDING TO MODIGLIANI(life cycle theory)
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AN AGENT WILL GENERALLY CONSUME LESS THAN WHAT SHE EARNS
WHEN YOUNG IN ORDER TO SAVE FOR THE FUTURE, WHEN RETIRED
SHE WILL NOT HAVE ANY MORE REVENUES
In keynesian theory of investment
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THE OPTIMUM THE FIRM WILL UNDERTAKE ALL THE PROJECTS WHOSE
RATE OF RETURN IS AT LEAST EQUAL TO THE INTEREST RATE IN THE
ECONOMY
FIRMS HOLD INVENTORIES FOR SEVERAL REASONS:
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1) TO SMOOTH PRODUCTION
2) AS A FACTOR OF PRODUCTIOn
3) TO AVOID THAT THEIR STOCK GETS DEPLETED
THEORY OF THE ACCELERATOR
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FIRMSWANT TO KEEP THE RATIO INVENTORIES/OUTPUT CONSTANT
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THE AVERAGE INCOME OF THE HOUSEHOLD
ACCORDING TO MODIGLIANI(life cycle theory)
, Give this one a try later!
AN AGENT WILL GENERALLY CONSUME LESS THAN WHAT SHE EARNS
WHEN YOUNG IN ORDER TO SAVE FOR THE FUTURE, WHEN RETIRED
SHE WILL NOT HAVE ANY MORE REVENUES
In keynesian theory of investment
Give this one a try later!
THE OPTIMUM THE FIRM WILL UNDERTAKE ALL THE PROJECTS WHOSE
RATE OF RETURN IS AT LEAST EQUAL TO THE INTEREST RATE IN THE
ECONOMY
FIRMS HOLD INVENTORIES FOR SEVERAL REASONS:
Give this one a try later!
1) TO SMOOTH PRODUCTION
2) AS A FACTOR OF PRODUCTIOn
3) TO AVOID THAT THEIR STOCK GETS DEPLETED
THEORY OF THE ACCELERATOR
Give this one a try later!
FIRMSWANT TO KEEP THE RATIO INVENTORIES/OUTPUT CONSTANT
