3.1 to 3.3 Vocab Flashcards
Multiplier
An economic factor that changes and causes other changes in associated areas
Multiplier effect
How a change in an economic activity causes changes in other associated areas
Marginal Propensity to Consume
The percentage of new income a consumer spends on goods and services compared to what they save
Marginal Propensity to Save
The percentage of aggregate new income not used for consumption
Disposable Income
What is left over after expenditures are taken care of
Expenditure Multiplier
Ratio that measures total change in real GDP compared to the size of a change in aggregate spending
Tax multiplier
How an increase/decrease in taxes increase/decrease disposable income
Short run
Producers have fixed and variable costs that limit their ability and flexibility to respond to market changes to maintain profits
Long Run
Period of time when all production and costs can be changed
Short-run aggregate supply
The total output of all goods and services that exists in a time period when production costs can be considered fixed
Short run aggregate supply curve
The positive relationship between an economy’s aggregate price level and the total quantity of final goods and services supplied by producers short run
Profitability
How much profit something makes; price per unit sold-production costs per unit = profit per unit
Nominal wages
Dollar amounts paid to employees
Sticky Wages
When nominal wages are slow to rise and fall in response to economic changes
Nominal Price rigidity
Prices for goods and services that are fixed
