Ch.6 Aggregate Expenditures Flashcards

1
Q

Autonomous / Induced

Which is/isn’t dependent on Income?

A

Autonomous = independent

Induced = Dependent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The Ratio of
∆ in Consumption
to
∆ in Income

A

MPC
Marginal Propensity to Consume

. ∆ Consumption
MPC = ————————
. ∆ Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

In the models of
1) Closed private economy
2) Complete Exp. Model

Relations btw MPC / MPS / MTR
∵ ?

A

1) Closed private economy
MPC+MPS = 1
∵ Y = C + S
MTR doesn’t exist ∵No Gov

2) Complete Exp. Model
MPC+MPS+MTR = 1
∵ Y = C + S + T

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The Income @which
has Equal Value of
Production &
Aggr. Expenditures

A

Expenditure Equilibrium

Y = AE

Injections = Leakages
I+G+X=T+Im+S
nm
No Unplanned Investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Unintended Investments
by firms to
Buildup or Rundown
Inventories

& formula

A

Unplanned Investment

= Y - AE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

∆ Inventory when
Y > AE &
Y < AE

A

Y > AE ⇒ Inventory↑

Y < AE ⇒ Inventory↓

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

$1 Increase in
Autonomous Spending
leads to
more than $1 Increase
in Income & AE

& formula

A

Multiplier

. ∆ Income
Multiplier = ——————
. ∆Auto. Expenditures

. 1 1
= —— = ———
. MLR (1-MPE)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Relations btw
MPC
MPS

in closed private economy

A

MPC+MPS = 1
∵ Y = C + S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Relations btw
MPE
MLR

A

MPE+MLR = 1
∵ Y = Expenditure + Leakage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

MPE & MLR

formulas

A

. ∆Aggr. Expenditure
MPE = —————————
. ∆ Income

. ∆ Leakage
MLR = ——————
. ∆ Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Disposable Income
Yd = ?

A

Yd = Y - T
= C + S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Budget Balance
= ?
meanings of
>0 / =0 / <0

A

Budget Balance
= T - G

when
>0 ⇒Budget Surplus
=0 ⇒Balanced Budget
<0 ⇒Budget Deficit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Relations btw
MPE
MPC
MPM

A

MPE = MPC - MPM

∵ Consumption incl. Import
& GDP excl. Import

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

MP__ = ?

M__R = ?

A

Marginal Propensity to ___
Expend/ Consume/ Save/ iMport/

Marginal ___ Rate
Leakage/ Tax/

How well did you know this?
1
Not at all
2
3
4
5
Perfectly