Determinants Of AD and Government Spending Flashcards
1
Q
What are determents?
A
Factors of X
2
Q
What is consumption?
A
Spending on consumer goods and services over time
3
Q
What can consumption be split into?
A
Goods/Services
Durable/Non - Durable
4
Q
What is saving?
A
What is not spent on income
5
Q
What is disposable income?
A
Income that is there to be spent
6
Q
What is the marginal propensity to consume?
A
The change in consumer spending following a change in income
7
Q
MPC =
A
Change in consumption / Change in income
8
Q
What are factors that affect consumption?
A
Interest rates
Level of future income
Consumer confidence
Level of income
Wealth
Availability of Credit
Distribution of income
9
Q
What are interest rates?
A
Cost of borrowing or reward for saving
10
Q
What does a rise in interest rates lead to?
A
Makes savings more attractive
Consumption less attractive
