28 Flashcards

1
Q

Average Consumption (AC)

A

Total consumption / Income

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2
Q

Average saving (AS)

A

Total savings / income

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3
Q

Maringal Propensity To Consume

A

Change in total consumption / change in income

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4
Q

Maringal Propensity To Save

A

Change in total saving / change in income

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5
Q

Consumption Function

A

C = a + by

Autonomous consumption (a) -> Expenditure when income = 0

Induced consumption (by) -> The proportion of consumption that varies with disposable income

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6
Q

Savings Function

A

S = sY - a

Autonomous dissaving (a) -> Proportion of savings people will draw on when income = 0

Induced saving (sY) -> Proportion of saving that varies with disposable income

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7
Q

Wealth effect

A

The change in consumption following a change in wealth

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