28 Flashcards
1
Q
Average Consumption (AC)
A
Total consumption / Income
2
Q
Average saving (AS)
A
Total savings / income
3
Q
Maringal Propensity To Consume
A
Change in total consumption / change in income
4
Q
Maringal Propensity To Save
A
Change in total saving / change in income
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
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
7
Q
Wealth effect
A
The change in consumption following a change in wealth