7 rplauroopovddy ts corsumeConsem plon Function a

ahdan-Conlumption fumctien s hemdinal soltn shp

sdweem IncameCY) nd Consumptiom Cc).
As inom2e Jntrases Consumption alao guse
deiuded unts NPC (maozinal
ropenidy
Dtopenity fo Centume us

and APC(averae pedpentehy

To

Beeponse
(sceponsely o Consume)
Congume
APC C MPC A
Equation Consumptuon Csue = ai6y ateY
Lehare Ca Censtumptn
a= i t meuL lenfnpLion
Cosb MPL
Y= Nalimal Jnlomo2

Y-Ccts)

.C (atcY)

Y
nlorme

Bruak even pomd Sheno C-Y

 bxplauneRoniele do Saue-Saung tuctio/9eks
bekveo
A V Saveng
n g lonction à a forr.luonal oalalionship

n ome Y) and davenas (s).

Lnrnsessaung also Iteies
Tnlorre
apenseky lo kave
rapenseky
diudedento MIS(2aognal
roponat sane
ropanaihy and APs(average repenuty do ave

APs-S ms=AS

mPS Lius betweem 0 and (o<s<1)

Saveng nealtne (c>y Zero ( t-r) atseeY)
Savorg Cam e

S=o S70

>x
S L O

JnlomeY
E shat us leant b
Sguli6aui Lntemme Houw

d determumed by AD and As apaoaA?

oY

s dolanminud
aw level d Dnlome and outpt
Psregate 2ermand ChO) ad agregate &ippl, (As)?

Sole The delbameovation e Lncome and Emplorymeid

he kaynesuam model n ho level A0 cend AS

ds porit ushom AD=A. ie, agregate emandd
Meels he
g a t Jepply s rnoc as Eyulborum
entt ar ln Cone

A-Y

A o L A S

D=AS

A D> A s

Y
nCame eute

pont E, no=AS
fen A0> A productoy sa eulpict to le Inerooaed
thu tuue uah ha egulibnun7 pont AD=AS)

sun Ao <AS, prdduch@m so butput to be deureore ol

till e renh tha auli bnum paent CD-4S)
975 uhat i Meant by Suiali'ium jnome Hovs

detir ruinod and Investrmort

ocun9 Sauwng approah4

dolermenead
lerel2 Lrom and Output l

savwng amd Invstmnt 7 4masks

Solu The auibmiem Intome o aunl t oahad 7ly
hun Lnestrert l) avals Saung s ) becnuae al Aio
Levelhime as no bndenty e r nlome, nel auetpect

ADASs

S7

-I
sT
175
O x

nnstment
&uhimuan tounl E, Saveng=
At
cehum I>s culpect ts be Unrsa0tdtill
i t reathis
quullbnum pount l=s
LShen <S eutpuit 3a kodulioo bo e deortoed i l l d
SLea h e qurligartem point Zzs
 Cuad
Ki tues e echanun L Kistmert muttiplur uldh6

help a 2uumme7 a l

e . putli p
Soly T e e Investrent mutl plirr dd defons.a ad

movrt y cshiih Jntone ncreoDeo

LnCease minvestmert expendituvre

Lsfh ordi, the numbear Q met
nros
loma

becnuae n crne w Lnuestment Called nleLdmArt

oultpdiser
k- AY

Cxample neumUriial.
Loack
vestmet éyT/0 doe loackK
n LacreoaL in
S o o coare fera t a
to da Zncreae i Zntome by
ultiplhir 1

Solu Snte k- Y

T2 (00 Cadre

k= y Soo

k=5
 Punctio moau y moa ba
xplayn he feemcdions mondy
L trplan amyfour Fienclesns monly }

Solukeen s marty 2e a ollaes

farmluand
Begves od
kndasdof /essedPaynanl mony
endarrel
Stendaod deJetsedpaymert Acng ad

mean hat Paymeto be

delevsd fayerds
lesmt
nn e s t a l i d en ory
Piade
DiAde dutorat

ore
oney elpo Ser ves ax a
toe Value d
thous lueat h toam
i ehe Loam
value e, 2ecple Can enp
slore purhoouig
purhoovig
ony alleu usto
msrney. efbAurre
ure
an usad a t amy Zime
be
dshiich
fousrr
aeswca
kfechers ads aad
he rart impotamt ponir
mediim hanz
amedum g ÉkUanse|
hat i f Beorves
ao

monoy h a
money
lunelo ase rchanged Je money
shele Lellog oqodo
Lellong

t
A salioral tensumer Lubail
a xlrusalion tilty
purhoug
vahess ga2do
mau'muse hi ulill dhl

amd enco
 Esplaur he barmoy fumetond? 2 mask

ast ad ollan
Sole Preeareyenclond

2 Ehange. s 7he mont wmpatart feumitio

Pedeu
hat i l psesles ao a mecium q Excharge
Reney
tha
/D2omey ds g0ortraly ard tulicleley etpteod vao

huch nagat
ha luothoeeo Saleo a
p2edium uusth
Pmade

R) eaaise Valuue The SeLond tmpa hnt Junkn

Lomnnon 2eapu
pRaneys Kat i t act ao a

umit altrnl. mONy

dems LSheh he oleofvaluto
peaatuemenl -t deen
rcooulral and eprpcd.
anolSeantoo aie
a l l Jesds
4E> 6xpdaen he etondaay fandtions 2 2 4marks
d
Soletcn ) Slandood g Refested tayproriti: ploney Serves ao
aStndaee dJentd payrehls. Ating ao
temcloot
depsned oymona meons Mat e paymarit ds bk
rade
utne Sete cl moneyloms
)
7andor lale loney also feoves a Dleans
taranfer valeue . 7ho functuom money alae frrm
he moduum thange.
gemuaral aeeptabelity )mmsy a ao

Thuuo monay g r i a t help i aamsJeroing h a

yalue Coauly quikly and efheuntlay
d

3 Sre Value Memey aloo dsvs ao Atar

9 Yalua paqplu tan Reafe heus leal% en tha fom

rEuy n he 6artr systm pcui tommodut

Were
p l t s t r e cveolth
uture uoe
81 txplai he Conlinzerl fouorlone 2aks
Ble sl) Maximuation ulillys Aatisol consuumis uWaal
to naxdmie hu
lt Boituatailesn)dshle
funchootr asioe gopdo and wICD

Buoduusrr aums
2) noaplryp2ent factr npull Eveay
d
tmakmusatiin hio prd hile
enpleyg9
enplng

Valus daoa rdlo Meny halpo

halpo ha
h a

0
rodusr lo aSAAve af lecuoceng Leluh regad
he numbes unu octor oduchdn to te

Smopleged
3) Rsbihaton e Natona/ Jncoyric omey Aoo pcilhtd

Vaicc
he dsbibuhsn mtonal mcerma among

fecro Procdechom. hoduhom iò he rteme

Conmbnatien dnd Cotachve. Hott beuduofaclom
Productoin
edd plays u c a l Rol
u) Snps neail-bystom a

Csedalycfem CommunLios md
un he modean
he a d e
Gearhes ncfuiitis a hizhly lopendert upon

syatn Cstentag
 ushat
dehat ae Minlues monay dupply ndeni tplar
sefers to ha fok maney
Solu Sopaly
Sapply d mentg
Lune
held bey the lblei ala petnt 0

pmeans aymaná and

stene valua

In h d a h a Nesee sank 2da diot o u r

umto 2onaySfply mely M m2 and

d

C=CuvSen
Do= Demonol Pepoat

D= Dapoaid

M M+ SD
SD Saveng Depeu

htTD

o r m e e lbanks(70
TD = Time Deparib alith

TDP Talol Dep ulth ho lsat lfpe taunys

a m o attn
yamo alion ercluding Nationa Saleng
Cnlpiatio 7DP )