Macroecon Chapter 27

Front 1

45 degree line

Back 1

on the graph would show where consumption would equal disposable income

Front 2

consumption schedule

Back 2

shows the amounts that households plan to spend for consumer goods at various e levels of income

Front 3

break even income

Back 3

is where consumption is equal to disposable income

Front 4

saving schedule

Back 4

indicates the amounts house holds plan to save at different income levels given a price level

Front 5

average propensity to consume APC and the average propensity to save MPS

Back 5

are respectively the percentages of additional income spent for consumption and saved and sum to 1

Front 6

wealth effect

Back 6

if household wealth increases people will spend more because they think they hare more assets

Front 7

expecte rate or return

Back 7

is directly related to the net profits revenues less operating cost

Front 8

demand curve

Back 8

shows this inverse relationship between the real rate of interest and the level of spending for capital goods

Front 9

multiplier

Back 9

is the ratio of the change in the real GDP to the initial change in spending .