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20 Cards in this Set
- Front
- Back
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If the consumption shifts downward, and the shift is not caused by higher taxes, the corresponding saving function shifts...
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Upward
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Business have hard time borrowing when
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Interest rates rise
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Anyhting that makes business operations less expensive, more profitable...
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will make investment increases
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What factor in the GDP equation is relative stable?
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Consumption
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What factors in the GDP equation is unstable?
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Government spending and investment
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Which is stronger and packs a more powerful punch, Govt. or tax?
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Government
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What is Keynes equation?
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1 = APC + APS
1 = MPC + MPS |
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MPS=
MPC= |
^S/^DI
^C/^DI |
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Multiplier (2 ways)
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1 / 1-MPC
1 / MPS |
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C+S =
C+Ig = |
=DI
=DI |
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45 degree line (DI)
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C = DI
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C > DI (45degree line)
C < DI (45 degree line) |
Dissaving
Saving |
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Level at which households plan to consume their entire incom...
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Break-Even Income
(C = DI) |
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Direct positive relationship between...
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Income and consumption &
Income and savings |
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Average and marginal propensities that show fractions that are consumed and saved.
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1 = APC + APS
1 = MPC + MPS |
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45 degree line (GDP) =
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= C + Ig (output)
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Withdrawal of spending from the income-expenditures stream (saving)
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Leakage
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The purchases of capital goods (investment)
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Injection
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A tax of a constant amount or a tax yeilding the same amount of tax revenue at each level of GDP
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Lum-sum tax
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a group of three economists appointed by the presideent to provide expertise and assistance on economic matters...
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CEA- Council of Economic Advisors
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