2- Consumption definitions Flashcards
1
Q
Aggregate Demand
A
The total level of demand in an economy at a moment in time.
C +I+G+(X-M)
2
Q
Consumption
A
Consumer spending on goods and services
3
Q
Disposable income
A
The money consumers have to spend, after taxes have been taken away and benefits added.
4
Q
Income
A
A flow of assets
5
Q
Savings
A
The decision by consumers to postpone consumption.
6
Q
Wealth
A
A stock of assets.
7
Q
Wealth effect
A
A change in consumption following a change in wealth.
8
Q
Marginal propensity to consume
A
The proportion of an increase in income spent on consumption.
= Change in consumption / change in income
9
Q
Marginal propensity to save
A
The proportion of an increase in income that is saved.
= Change in savings / change in income
