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12 Cards in this Set
- Front
- Back
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Consumption Function
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An equation showing how an individual household's consumer spending varies with the household's current disposable income.
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Aggregate Consumption Function
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The relationship fo the economy as a whole between aggregate current disposable income and aggreagate consumer spending.
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Planned Investment Spending
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The investment spending that businesses intend to undertake during a given period.
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Accelerator Principle
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A higher growth rate of GDP leads to higher planned investment spedning, and a lower growth rate of GDP leads to lower planned investment spending.
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Invetories
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Stocks of goods held to satisfy future sales.
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Inventor Investment
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The value of the change in total inventories held in the economy during a given period.
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Unplanned Inventory Investment
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When actual sales are more or less than buesinesses expected, leading to unplanned changes in inventories.
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Actual Investment Spending
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The sum of planned investment spending and unplanned inventory investment.
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Planned Aggregate Spending
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The total amount of palnned spending in the economy.
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Income-Expenditure Equilibrium
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When aggreage output, measure by real GDP, is equal to planned aggreagate spending.
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Income-Expenditure Equilibrium GDP
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The level of real GDP at which real GDP equals planned aggreage spending.
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Keynesian Cross Diagram
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Identifies income-expenditure equilibrium as the point where the planned aggregate spending line crosses the 45-degree line.
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