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30 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What does the letters (MPC) stand for?
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Marginal Propensity to CONSUME
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What does the letters (MPS) stand for?
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Marginal Propensity to SAVE
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What does the letter (C) stand for?
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Consume
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What does the letter (S) stand for?
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Save
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What does the letters (DI) stand for?
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Disposable Income
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What is the definition or meaning to MPC?
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The proportion, or fraction, of any change in income consumed.
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FORMULA:
What does MPC = ? |
*Change In Consumption
MPC=_____________________ Change in Income |
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FORMULA:
What does MPS= ? |
*Change In saving
MPS=_____________________ Change in Income |
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The sum of MPC & MPS for any change in disposable income must always be...#?
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1
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The fraction consumed (MPC) & the fraction saved (MPS) must always exhaust...
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WHOLE CHANGE IN INCOME
e.g. MPC+MPS=1 |
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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 |
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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 |
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What does the term DELTA infer?
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Change, a deviation between two figures
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What 2 charts do we use to find the BREAK EVEN INCOME?
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The consumption & savings schedule
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In the conumption schedule chart, which(XY) position of the chart is consumption?
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Left
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Left/verticle side of chart Or, Bottom/horizontal side
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In the consumption schedule chart, which(XY) position of the chart is Disposable income?
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Bottom
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Left/verticle side of chart Or, Bottom/horizontal side
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In a consuption schedule, what reference line & ° must be drawn first from the point where (DI) & (C) intersect?
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a 45 degree line
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DI=Disposable income
C=Consumption |
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What 2 items of data must be used to create a consumption slope for the chart?
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(GDP=DI) & (C)
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We use these 2 figures in order to create a line or curve. (A formula is the answer.)
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What chart must be created in order to create a Saving Schedule chart?
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Consumption Schedule
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What intersection point from the Consumption schedule must we use in order to create a Savings schedule slope?
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Break even point
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(Angle) - (consumption schedule slope)
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In a the Savings Schedule chart, what 2 values are used to construct the chart slope?
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(S) Savings; & (DI) Disposable Income
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In a the Savings Schedule chart, (DI) is on what part of the chart?
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Bottom
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Bottom or Left
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In a the Savings Schedule chart, (S) is on what part of the chart?
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Left
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Bottom or Left
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What is the "Multiplier Effect?"
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a change in a component of total spending which leads to a larger change in GDP
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Definition
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What does the Multiplier Effect value equal to?
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Multiplier =
Change in REAL GDP __________________ Initial Change in Spending |
Formula
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The MPC and the Multiplier are...
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DIRECTLY Related
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Related how?
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The MPS and the Multiplier are...
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INVERSELY Related
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Related how?
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What is the Multiplier Formula for MPC?
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M =____1____
1 - MPC |
Minus what?
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What is the Multiplier Formula for MPS?
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M =____1____
MPS |
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The expected rate of return is?
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(Profit) - (Investment)
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Term formula
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