Keynesian theory/Tutorials: Difference between revisions

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==The Keynesian model==
Let:-<br>
&nbsp;&nbsp;&nbsp;&nbsp;y&nbsp;=&nbsp;the thenational income<br>
&nbsp;&nbsp;&nbsp;&nbsp;N&nbsp;=&nbsp;numbers employed<br>
&nbsp;&nbsp;&nbsp;&nbsp;W&nbsp;=&nbsp;the money wage<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;l&nbsp;=&nbsp;the income elasticity of demand for money<br>
&nbsp;&nbsp;&nbsp;&nbsp;L&nbsp;=&nbsp;the interest elasticity of demand for money<br>
then:-<br>
The demand for money
:::::: M&nbsp;=&nbsp;lPy&nbsp;+&nbsp;L(r) &nbsp;&nbsp;------------------------&nbsp;(1)
The consumption function
::::::  s&nbsp;=&nbsp;s(y)&nbsp;&nbsp;&nbsp;--------------------------------&nbsp;(2)
The production function
::::::y&nbsp;=&nbsp;y(n)&nbsp;&nbsp;------------------------------------&nbsp;(3)
The labour market
::::::dy/dn&nbsp;=&nbsp;W/P&nbsp;&nbsp;-------------------------------&nbsp;(4)
Investment
::::::i&nbsp;=&nbsp;i(r)&nbsp;&nbsp;---------------------------------------&nbsp;(5)
Savings
::::::s&nbsp;=&nbsp;i&nbsp;&nbsp;------------------------------------------&nbsp;(6)
Sticky wages
::::::W&nbsp;=W<sub>o,<sub>&nbsp;&nbsp;---------------------------------------------------&nbsp;(7)

Revision as of 06:09, 21 November 2009

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https://en.citizendium.org/wiki/index.php?title=Keynesian_theory/Tutorials&printable=yes
Tutorials relating to the topic of Keynesian theory.

The Keynesian model

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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