Studied by 3 people
Marginal propensity
________ to save- The fraction of any change in income saved.
Movement
________ b /w points on consumption schedule= Change in amount consumed.
Household expectations
________ about future prices and income may affect current spending and saving.
Multiplier
________- Ratio of a change in GDP to the initial change in spending.
Average propensity
________ to save- The fraction of total income that is saved.
schedule
Saving ________- There is a direct relationship between saving and DI but that saving is a smaller proportion of a small DI than of a large DI.
disposable income
45 degree line- Reference line; the vertical distance between the 45 line and any point on the horizontal axis measures either consumption or ________.
Wealth effect
________- Events sometimes suddenly boost the value of existing wealth.
current consumption
When a household borrows, it can increase ________ beyond what would be possible if its spending were limited to its disposable income.
Marginal propensity
________ to consume- The proportion, or fraction, of any change in income consumed.
Disposable income
________ determines levels of consumption + saving.
Average propensity
________ to consume- The fraction, or percentage, of total income that is consumed.
Multiplier
________= 1 /Marginal Propensity to Spend.
45 degree line
Reference line; the vertical distance between the 45 line and any point on the horizontal axis measures either consumption or disposable income
Consumption schedule
Schedule showing the various amounts that households would plan to consume at each of the various levels of disposable income that might prevail at some specific time
Saving schedule
There is a direct relationship between saving and DI but that saving is a smaller proportion of a small DI than of a large DI
Break-even income
Income level at which households plan to consume their entire incomes
Average propensity to consume
The fraction, or percentage, of total income that is consumed
Average propensity to save
The fraction of total income that is saved
Marginal propensity to consume
The proportion, or fraction, of any change in income consumed
Marginal propensity to save
The fraction of any change in income saved
Wealth effect
Events sometimes suddenly boost the value of existing wealth
Expected rate of return
Anticipated revenue that will be generated
Investment demand curve
Shows the amount of investment forthcoming at each real interest rate
Multiplier
Ratio of a change in GDP to the initial change in spending
45 degree line
Reference line; the vertical distance between the 45 line and any point on the horizontal axis measures either consumption or disposable income
Consumption schedule
Schedule showing the various amounts that households would plan to consume at each of the various levels of disposable income that might prevail at some specific time
Saving schedule
There is a direct relationship between saving and DI but that saving is a smaller proportion of a small DI than of a large DI. If households consume a smaller and smaller proportion of DI as DI increases, then they must be saving a larger and larger proportion.
Break-even income
Income level at which households plan to consume their entire incomes
Average propensity to consume
The fraction, or percentage, of total income that is consumed
Average propensity to save
The fraction of total income that is saved
Marginal propensity to consume
The proportion, or fraction, of any change in income consumed
Marginal propensity to save
The fraction of any change in income saved
Wealth effect
Events sometimes suddenly boost the value of existing wealth. When this happens, households tend to increase their spending and reduce their saving.
Expected rate of return
Anticipated revenue that will be generated
Investment demand curve
Shows the amount of investment forthcoming at each real interest rate
Multiplier
Ratio of a change in GDP to the initial change in spending
Note 
Flashcard (32)