macroeconomic variables list

MacroEconomic variable

1. Consumption,
2. Savings and 
3. Investment.

• Consumption is the act of using goods and services. Or is the one that determine production and distribution. Consumption can be in form of: consumption expenditure and consumption of food. It can be expressed as;

C=a+by

Where A=autonomous consumption

B=Marginal Propensity to Consume (MPC)

Yd=Disposable Income 

Therefore, C=A+BYd

B=MPC=DC/Dy

Yd=y-t

   

Factors affecting Consumption

1. Government policy I.e, fiscal and monetary policy.
2. Expected future change in income.
3. Credit facilities.
4. Inherited wealth.
5. Population distribution.
6. Social attitude toward savings.

• Saving

Saving is the income that is not used for consumption. It refers to the part of income that is not spent on goods and services.

    Aggregate saving=Sh+St

S=y-(a+by)

S=y-a-by

S=-a+y-a-by

S=-a+y(1-b)

S=-a+Yb

Note that:

APC+APS=1

MPC+MPS=1

   

Determination of Saving

1. Income level
2. Interest rates
3. Government policy
4. Habit of environmental factors
5. Bank efficiency
6. Technical progress
7. Security level
8. Cost of funds
9. Profit.

click here to download income, consumption and savings table with worked solvings

• Investment

Investment is a purchase of tangible assets such as machine or stock inventory.

-Gross investment

-Net investment

-Introduced investment

-Replacement investment

Reference

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