Chap 12 Econ

Front 1

sum of all planned consumption and planned savings equals

Back 1

real disposable income

Front 2

real disposable income rises, _____ and _______

Back 2

planned real consumption rises and all planned real saving rises

Front 3

average propensity to save APS equals

Back 3

saving divided by real disposable income

Front 4

apc plus aps equals

Back 4

1

Front 5

marginal propensity to consume MPC equals

Back 5

the change in consumption divided by the change in disposable income

Front 6

the amount of consumption that is _____ of real disposable income is called _______, when autonomous consumption exists, the ______ of the consumption function is ____and apc ___ as real disposable income____

Back 6

independent
autonomous consumption
vertical intercept
positive
falls
rises

Front 7

dissaving exists when

Back 7

real consumption expenditures exceed real disposable income

Front 8

the consumption function will shift if

Back 8

autonomous consumption changes due to changes in real household wealth

Front 9

investment varies inversely with _____; the planned investment curve shifts if there are ____, ____, and _____

Back 9

changes in interest rate

changes in profit expectations, innovation and technology and business taxes

Front 10

along the 45 degree reference line, _______; where the planned expenditures line intersects _____ line, _____ exists; where curves do not intersect _____ exists

Back 10

planned total expenditures equal real GDP
the 45 degree reference
equilibrium
disequilibrium

Front 11

in the model in which government and foreign transactions are ignored, household planned consumption expenditures plus ___ equal ___

Back 11

business investment expenditures
aggregate planned expenditures

Front 12

if total planned expenditures exceed real GDP, business inventories___involuntarily and businesses will find it profitable to ____ production of goods and services; if total planned expenditures are less then real gdp business inventories will ___ involuntarily and businesses will find it profitable to ____ production of goods and services

Back 12

fall
increase
rise
decrease

Front 13

if autonomous government purchases of goods and services (G) are added to aggregate expenditures curve, aggregate expenditures curve shift _____ and equilibrium real gdp per year will ___

Back 13

upward
rise

Front 14

if net exports are added to the aggregate expenditure curve and imports exceed exports then net exports are ___ number and equilibrium real gdp will ___ by amount ____ net exports

Back 14

negative
fall
greater than

Front 15

in the keynesian model, is wealth rises..

Back 15

the consumption function shifts upward

Front 16

in the keynesian model, the apc ___ and the aps ____ as ...

Back 16

falls
rises
real disposable income rises

Front 17

if autonomous consumption is positive, then the

Back 17

vertical intercept of the consumption function is positive

Front 18

if real disposable income rises

Back 18

there is a movement along up the C function

Front 19

a fall in real disposable income generates

Back 19

a downward movement along the consumption function

Front 20

at every point along the 45-degree line,

Back 20

total planned expenditures equal real GDP

Front 21

autonomous consumption and autonomous investment are

Back 21

independent of real gdp

Front 22

the equilibrium level of real gdp is found at the

Back 22

point at which the planned expenditures curve intersects the 45 degree reference line

Front 23

if total planned expenditures exceed real gdp, then

Back 23

business inventories will fall and businesses will increase production of goods and services

Front 24

if the saving function shifts downward

Back 24

then the consumption function shifts upward

Front 25

ignoring the government and foreign sectors, if planned saving is less than planned investment,

Back 25

then total planned expenditures would exceed real gdp

Front 26

if autonomous expenditures rise,

Back 26

then the planned expenditures curve will shift upward

Front 27

if autonomous expenditures rise by $1 billion,

Back 27

real gdp will probably rise by more than 1$ billion

Front 28

if the price level falls

Back 28

planned expenditures curve will shift upward

Front 29

if mpc is .75 and the sras curve is horizontal, a $1 billion increase in autonomous expenditures will

Back 29

cause real gdp to rise by $4 billion

Front 30

autonomous real consumption

Back 30

changes with changes in wealth

Front 31

the 45 degree reference line

Back 31

is a line along which total planned expenditures equal real gdp

Front 32

if planned investment is autonomous then

Back 32

it is independent of real gdp

Front 33

at that level of real gdp where the planned expenditures curve intersects the 45 degree reference line (ignoring G and X)

Back 33

equilibrium exists
unplanned inventory changes equal zero
planned savings equals planned investment

Front 34

changes in autonomous expenditures

Back 34

shift the planned expenditures curve

Front 35

the consumption function analyzed in the text

Back 35

shifts if autonomous consumption changes

Front 36

if total planned expenditures exceed real gdp

Back 36

business inventories will fall involuntarily

Front 37

if total planned expenditures are less than real gdp

Back 37

business inventories will rise involuntarily

Front 38

which of the following is most unlike the others?

consumption function
investment function
45 degree reference line
planned expenditures curve

Back 38

45 degree reference line

Front 39

if business inventories rise involuntarily

Back 39

than total planned expenditures are less than real gdp

Front 40

at a point on the 45 degree reference line

Back 40

total planned expenditures equal real gdp

Front 41

if planned saving exceeds planned investment then (ignoring government and foreign transactions)

Back 41

total planned expenditures are less than real gdp
real gdp exceeds total planned expenditures
business inventories will rise involuntarily

Front 42

in macroeconomic equilibrium (ignoring government and foreign transactions)

Back 42

planned saving equals planned investment

Front 43

as the mpc rises, the multiplier

Back 43

rises

Front 44

if mpc is 1/2 then (ignoring price level effects)

Back 44

shifts in planned expenditures curve lead to change in equilibrium real gdp that equals twice the value of that shift

Front 45

the multiplier

Back 45

relates changes in autonomous expenditures to changes in equilibrium real gdp
deals with shifts in the planned expenditures curve
implies that economic fluctuations are magnified

Front 46

when price level rises

Back 46

the planned expenditures curve shifts downward

Front 47

if the planned expenditures curve shifts downward when the price level rises, and upward when the price level falls then

Back 47

the real gdp changes by less than the multiplier effect on nominal income
the economy can pull out of recession faster
economic fluctuations due to shocks will be lessened

Front 48

____ is to real disposable income as ____ is to wealth

Back 48

saving
savings

Front 49

real saving plus real consumption equals

Back 49

real disposable income

Front 50

which one of the following causes the consumption function to shift

an increase in real disposable income
a decrease in real disposable income
an increase in wealth
an increase in investment

Back 50

a increase in wealth

Front 51

if autonomous consumption is positive then

Back 51

a vertical intercept of the consumption function is positive
the apc falls as real disposable income rises
dissaving occurs at very low real disposable income levels

Front 52

autonomous consumption

Back 52

varies with wealth

Front 53

is mpc=.8

Back 53

then mps =.2

Front 54

if real disposable income rises by $100 and consumption rises by $75 then

Back 54

mps equals .25

Front 55

if apc falls as real disposable income rises then

Back 55

the aps must rise as real disposable income rises

Front 56

if the apc falls as real disposable income rises

Back 56

vertical intercept of the consumption function is positive
vertical intercept of the saving function is negative
aps rises from a negative number to zero to a positive number

Front 57

planned investment is less than planned saving

Back 57

total planned expenditures are less than real gdp

Front 58

equilibrium

Back 58

total planned expenditures equal real gdp

Front 59

recession

Back 59

falling real gdp

Front 60

reciprocal of mps

Back 60

multipier

Front 61

apc

Back 61

total consumption divided by total disposable income

Front 62

mpc

Back 62

change in consumption divided by change in real disposable income

Front 63

autonomous consumption

Back 63

nonincome determinant of consumption

Front 64

look on problems page 145-148

Back 64

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