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30 Cards in this Set

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What does the letters (MPC) stand for?
Marginal Propensity to CONSUME
What does the letters (MPS) stand for?
Marginal Propensity to SAVE
What does the letter (C) stand for?
Consume
What does the letter (S) stand for?
Save
What does the letters (DI) stand for?
Disposable Income
What is the definition or meaning to MPC?
The proportion, or fraction, of any change in income consumed.
FORMULA:
What does

MPC = ?
*Change In Consumption
MPC=_____________________
Change in Income
FORMULA:
What does

MPS= ?
*Change In saving
MPS=_____________________
Change in Income
The sum of MPC & MPS for any change in disposable income must always be...#?
1
The fraction consumed (MPC) & the fraction saved (MPS) must always exhaust...
WHOLE CHANGE IN INCOME
e.g.
MPC+MPS=1
How is a MPC figured calculated?
*Don't forget the DELTA
Delta(C)/Delta(GDP=DI) or,

Change in CONSUMPTION (divided by) a Change in the Level of output & Income
How is a MPS figured calculated?
*Don't forget the DELTA
Delta(S)/Delta(GDP=DI) or,

Change in SAVINGS(divided by) a Change in the Level of output & Income
What does the term DELTA infer?
Change, a deviation between two figures
What 2 charts do we use to find the BREAK EVEN INCOME?
The consumption & savings schedule
In the conumption schedule chart, which(XY) position of the chart is consumption?
Left
Left/verticle side of chart Or, Bottom/horizontal side
In the consumption schedule chart, which(XY) position of the chart is Disposable income?
Bottom
Left/verticle side of chart Or, Bottom/horizontal side
In a consuption schedule, what reference line & ° must be drawn first from the point where (DI) & (C) intersect?
a 45 degree line
DI=Disposable income
C=Consumption
What 2 items of data must be used to create a consumption slope for the chart?
(GDP=DI) & (C)
We use these 2 figures in order to create a line or curve. (A formula is the answer.)
What chart must be created in order to create a Saving Schedule chart?
Consumption Schedule
What intersection point from the Consumption schedule must we use in order to create a Savings schedule slope?
Break even point
(Angle) - (consumption schedule slope)
In a the Savings Schedule chart, what 2 values are used to construct the chart slope?
(S) Savings; & (DI) Disposable Income
In a the Savings Schedule chart, (DI) is on what part of the chart?
Bottom
Bottom or Left
In a the Savings Schedule chart, (S) is on what part of the chart?
Left
Bottom or Left
What is the "Multiplier Effect?"
a change in a component of total spending which leads to a larger change in GDP
Definition
What does the Multiplier Effect value equal to?
Multiplier =

Change in REAL GDP
__________________
Initial Change in Spending
Formula
The MPC and the Multiplier are...
DIRECTLY Related
Related how?
The MPS and the Multiplier are...
INVERSELY Related
Related how?
What is the Multiplier Formula for MPC?
M =____1____
1 - MPC
Minus what?
What is the Multiplier Formula for MPS?
M =____1____
MPS
The expected rate of return is?
(Profit) - (Investment)
Term formula