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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