Aggregate Demand Analysis Flashcards
1
Q
The aggregate demand curve is
A
Similar to the normal demand curve
2
Q
The AD curve can
A
Shift
It might shift to the right
It might shift to the left
3
Q
The multiplier effect leads to
A
A larger increase in aggregate demand
4
Q
Average propensity to consume or save
A
Shows what happens to incomes
5
Q
The marginal propensity to consume or save
A
Affects the size of the multiplier
6
Q
Learn the formula for
A
Calculating the multiplier from the MPC
7
Q
Multiplier =
A
1 / 1 - MPC
8
Q
The marginal propensity to withdraw can also
A
Be used to find the multiplier
9
Q
MPW =
withdraw
A
MPS + MPT + MPM
Save
Tax
Import
10
Q
Learn formula for calculating multiplier from the MPW
A
MPC + MPW = 1
Multiplier = 1/MPW
