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13 Cards in this Set
- Front
- Back
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Aggregate Demand
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The total amount that all consumers, business firms, government agencies, and foreigner spend on finals goods and services.
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Consumer Expenditure (C)
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The total amount spent by consumers on newly produced goods and services.
(excluding new homes-considered investment) |
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Investment Spending (I)
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The sume of the expenditures of business firms on new plant, equipment, software, and households on new homes. Financial "investments" are not included and neither are resales of existing physical assets.
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Government Purchases (G)
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Refer to the goods (such as papers clips) and services (school teaching) purchased by all levels of the government
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Net Exports (X-IM)
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The difference between exports (X) and imports (IM). It indicates the difference between what we sell to foreigners and what we buy from them.
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National Income
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The sum of the incomes that all individuals in the economy earn in the form of wages, interest, rents, and profits. It excludes government transfer payments and is calculated before and deductions are taken for income taxes.
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Disposable Income (DI)
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The sum of the incomes of all individuals in the economy after all taxes have been deducted and all transfer payments have been added.
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Transfer Payments
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Sums of money that the government gives certain individuals as outright grants rather than as payments for services rendered to employers.
Ex. Social Security and unemployment benefits |
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Scatter Diagram
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A graph showing the relationship between two variables (consumer spending and disposable income). Each year is represented by a point in a diagram, and the coordinates of each year's point show the values of the two variables in that year.
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Consumption Function
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Shows the relationship between total consumer expenditures and total disposable income in the economy, holding all other determinants of consumer spending constant.
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Marginal Propensity to Consume (MPC)
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The ratio of the change in consumption relative to the change in disposable income that produces change in consumption. On a graph, it appears as the slope of the consumption function.
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Personal Saving Rate
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The ratio of consumer saving to disposable income
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Money-fixed asset
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An asset whose value is a fixed number of dollars
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