2.2.2, 2.2.3, 2.2.4, 2.2.5 -Consumption, Trade, investment

Question 1

What is the definition of MPC

Answer 1

The change in consumer spending arising from a change in disposable income

Question 2

What is the definition of MPS

Answer 2

The change in consumer savings arising from a change in disposable income.

Question 3

equation for MPC

Answer 3

MPC = ΔC / Δyd

Question 4

equation for MPS

Answer 4

MPS = ΔS / Δyd

Question 5

MPC + MPS =

Answer 5

1

Question 6

What is consumer confidence

Answer 6

Households’ attitudes
Towards: General economic situation, Personal financial situation, Views on major household purchases.

Question 7

What is capital depreciation

Answer 7

value of capital stock ↓

Question 8

what is Gross investment

Answer 8

Total spending on capital stock

Question 9

Net investment =

Answer 9

Gross investment - Depreciation

Question 10

What are animal spirits

Answer 10

confidence and optimism that influence economic decision-making and behavior.

Question 11

What is budget deficit

Answer 11

Total government spending > Total government receipts

Question 12

What is a budget surplus

Answer 12

Total government spending < Total government receipts

Question 13

3 examples of gov spending

Answer 13

Provision of public services, Government investment, Welfare