On keynesian model what variables are used
In the Keynesian model, several variables are used to analyze and understand the functioning of an economy. These variables include:
1. Aggregate demand (AD): Aggregate demand represents the total demand for goods and services in an economy at a given price level and time period. It is the sum of consumption, investment, government spending, and net exports (exports-imports).
2. Aggregate supply (AS): Aggregate supply is the total quantity of goods and services that producers are willing and able to supply at a given price level and time period. It includes the output produced by firms in the economy.
3. Consumption (C): Consumption refers to the total spending by households on goods and services. It is influenced by factors such as disposable income, consumer confidence, interest rates, and wealth.
4. Investment (I): Investment represents the spending by firms on capital goods, such as machinery, equipment, and infrastructure. It is influenced by factors like interest rates, expected returns on investment, and business confidence.
5. Government spending (G): Government spending includes the expenditures made by the government on goods and services, such as infrastructure projects, healthcare, and education. It can be influenced by fiscal policies and political decisions.
6. Net exports (NX): Net exports is the difference between the value of a country's exports and imports. It depends on factors such as exchange rates, international trade policies, and the competitiveness of domestic industries.
7. Saving (S): Saving refers to the portion of income that households, businesses, and the government save rather than spend. It affects the level of consumption and investment in the economy.
By analyzing the relationships and interactions between these variables, the Keynesian model provides insights into the determinants of economic output, employment, and inflation.