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Slide 1
Chapter 7
A Real Intertemporal Model
with Investment
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Slide 2
Figure 7-1 The Representative Consumer’s
Current Labor Supply Curve
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Slide 3
Figure 7-2 An Increase in the Real Interest Rate Shifts
the Current Labor Supply Curve to the Right
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Slide 4
Figure 7-3 Effects of an Increase in Lifetime
Wealth
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Slide 5
Figure 7-4 The Representative Consumer’s Current
Demand for Consumption Goods Increases with Income
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Slide 6
Figure 7-5 An Increase in the Real Interest Rate from r1
to r2 Shifts the Demand for Consumption Goods Down
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Slide 7
Figure 7-6 An Increase in Future Income Increases Lifetime
Wealth for the Consumer, Shifting Up the Demand
for Consumption Goods
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Slide 8
Figure 7-7 The Demand Curve for Current Labor Is the
Representative Firm’s Marginal Product of
Labor Schedule
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Slide 9
Figure 7-8 The Current Demand Curve for Labor Shifts Due to
Changes in Current Total Factor Productivity z and
in the Current Capital Stock K
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Slide 10
Figure 7-9 Optimal Investment Schedule for the
Representative Firm
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Slide 11
Figure 7-10 The Optimal Investment Schedule Shifts to the Right
if Current Capital Decreases or Future Total Factor
Productivity Is Expected to Increase
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Slide 12
Table 7-1
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Slide 13
Figure 7-11 Determination of Equilibrium in the
Labor Market Given the Real Interest Rate r
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Slide 14
Figure 7-12 Construction of the Output Supply
Curve
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Slide 15
Figure 7-13 An Increase in Current or Future
Government Spending Shifts the Ys Curve
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Slide 16
Figure 7-14 An Increase in Total Factor
Productivity Shifts the Ys Curve
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Slide 17
Figure 7-15 The Demand for Current Goods
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Slide 18
Figure 7-16 Construction of the Output Demand
Curve
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Slide 19
Figure 7-17 The Output Demand Curve Shifts to the
Right if Current Government Spending Increases
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Slide 20
Figure 7-18 The Complete Real Intertemporal
Model
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Slide 21
Figure 7-19 A Temporary Increase in
Government Purchases
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Slide 22
Figure 7-20 A Permanent Increase in
Government Purchases
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Slide 23
Figure 7-21 Natural Log of Real Investment,
1929-1998
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Slide 24
Figure 7-22 The Equilibrium Effects of a
Decrease in the Current Capital Stock
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Slide 25
Figure 7-23 The Equilibrium Effects of an
Increase in Current Total Factor Productivity
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Slide 26
Figure 7-24 The Relative Price of Energy in the
United States
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Slide 27
Figure 7-25 Percentage Deviations from Trend in
GDP for the United States
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Slide 28
Figure 7-26 Percentage Deviations from Trend in Real
Investment and Real GDP for the United States
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Slide 29
Figure 7-27 Percentage Deviations from Trend in
Employment and Real GDP for the United States
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Slide 30
Figure 7-28 Percentage Deviations from Trend in Real
Consumption and Real GDP for the United States
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Slide 31
Figure 7-29 The Equilibrium Effects of an
Increase in Future Total Factor Productivity
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Slide 32