Chapter 4 - National Income and Price Determination

consumption function

consumption function

The ________ is in relation to a households current disposable income to its consumers spending.

life cycle hypothesis

The ________, an influential economic model of how consumers make spending vs saving decisions, emphasizes the impact of wealth on spending.

vertical intercept

The ________ A, or aggregate autonomous consumer spending, grows when aggregate wealth rises- for example, as a result of a rising stock market.

leftward shift

A(n) ________ of the aggregate demand curve, which shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world, is what economists refer to when they talk about a negative demand shock to the economy as a whole.

marginal propensity

The ________ to consume, or MPC, is the amount of money spent by a household for every additional dollar of current disposable income.

Direct increases

________ in investment spending will result in a corresponding increase in the income value of aggregated output.

MPC

The consumer spending changes due to an increase or a decrease in disposable income can be calculated by the ________ formula below, as it calculates the change in consumer spending divided by the change in disposable income:

autonomous consumer

Because a household with no disposable income can borrow or use its savings to buy some items, ________ spending is larger than zero.

total change

The ________ in real GDP that is caused by an autonomous change in aggregate spending can be calculated by using the following formula:

consumption function

The slope of any line is "rise over run, "with the rise representing an increase in consumer expenditure and the run being an increase in the total discretionary income for the ________.