Ai generated Flashcards
What is the formula for GDP?
GDP ≡ C + I + G + X - IM + Is
What does Y equal in the context of economic equilibrium?
Y = Z
What is the equation for Z?
Z = (c0 - c1T + I line + G) + c1Y
How is Y expressed in terms of c1, c0, I line, G, and T?
Y = 1 / (1 - c1) * (c0 + I line + G - c1T)
What is the relationship between I and S, T, G?
I = S + (T - G)
What does Z represent in the economic context?
Z ≡ C + I + G + X - IM
What is the formula for the change in Y (ΔY)?
ΔY = 1 / (1 - c1) * ΔZ
What does Y𝐷 represent in the equation Y𝐷 = 𝑌 − 𝑇?
Y𝐷 represents disposable income.
What does the variable ‘Y’ signify in the equation Y𝐷 = 𝑌 − 𝑇?
Y signifies total income.
What does the variable ‘T’ represent in the equation Y𝐷 = 𝑌 − 𝑇?
T represents taxes.
What is the equation for consumption (C) in relation to disposable income?
C = c0 + c1Y𝐷
In the consumption function C = c0 + c1Y𝐷, what does c0 represent?
c0 represents autonomous consumption.
In the consumption function C = c0 + c1Y𝐷, what does c1 represent?
c1 represents the marginal propensity to consume.
Fill in the blank: In the equation C = c0 + c1Y𝐷, C stands for _______.
consumption
True or False: In the consumption function, an increase in disposable income (Y𝐷) leads to an increase in consumption (C).
True
