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6 Cards in this Set

  • Front
  • Back
What is given in a closed, private economy?
Private= No Government
Closed = No International Trade
What two concepts are ignored when calculating DI for a closed, private economy?
Depreciation
Retained Earnings
Real GDP = ?
DI = C+Ig
What is the "mx+b" equation for Consumption?
m = MPC
x = Real GDP = Q
Ca = autonomous consumption
What is autonomous consumption?
• Consumption expenditure that occurs when income levels are zero (MPC = 0)
What is different about the graphs of (1) the investment demand curve and (2) the investment schedule?
(1) • Linear downsloping demand curve (Investment on X-axis, Real Interest Rate on Y-axis)
(2) • Linear line at the amount of investment determined in (1) to the various levels of GDP (Thus, (1)'s investment on Y-axis, Real GDP on X-axis)