Vocab Page 3

Question 0

Contractionary AS Shock

Answer 0

A sudden, temporary decrease in aggregate supply that causes a decrease in Aggregate Expenditure and therefore a DECREASE in national income

Question 1

Expansionary AS Shock

Answer 1

A sudden, temporary increase in aggregate supply that causes an increase in Aggregate Expenditure and therefore an increase in national income

Question 2

Contractionary AD Shock

Answer 2

A sudden, temporary decrease in Aggregate Demand that causes a DECREASE in national income

Question 3

Autonomous Expenditure

Answer 3

This is the one that is independent from the level of income. It causes a parallel shift of the Aggregate Expenditure line

Question 4

Induced Expenditure

Answer 4

This is the one that is dependent exclusively on the level of income. It causes a pivotal shift of the Aggregate Expenditure line

Question 5

Budget Surplus

Answer 5

This is when taxes are more than government expenditures

Question 6

Budget Balance

Answer 6

It is the theory that explains the relation between taxes and government expenditure

Question 7

Budget Deficit

Answer 7

This is when taxes are less than government expenditures

Question 8

Balance Budget

Answer 8

This is when taxes are equal to government Expenditures

Question 9

Market

Answer 9

Any place/situation where buyers and sellers are bought together for the exchange of commodities, inputs, and/or financial assets

Question 10

Marginal Propensity to Consume

Answer 10

Refers to the fraction of every new dollar of national income that is allocated to consume

Question 11

Marginal Propensity to Spend

Answer 11

Refers to the fraction of every new dollar of national income that is allocated to spend

Question 12

Marginal Propensity to Tax

Answer 12

Refers to the fraction of every new dollar of national income that is taken in taxation

Question 13

Marginal Propensity to Withdraw

Answer 13

Refers to the fraction of every new dollar of national income that is allocated to withdraw