Tài liệu Monetary and fiscal policy in a closed economy

Bringing together the real and financial sectors
Having seen equilibrium in the goods and money markets separately,it is now time to explore the links between them and to look at simultaneous equilibrium in both.

Consumption revisited
Income is a key determinant of consumption
but other factors shift the consumption function
–household wealth
–availability of credit
–cost of credit
These create a link between the financial and real sectors
–because interest rates can be seen to influence consumption