Income and Spending

question

Aggregate Demand

answer

the amount of goods and services in the economy that will be purchased at all possible price levels

question

aggregate demand equation

answer

AD=C+I+G+NX

question

What is equilibrium?

answer

when quantity of output produced=quantity demanded

question

Equilibrium

answer

Y=AD

Y= C+I+G+NX

question

consumption function

answer

the relationship between consumption spending and disposable income.

Consumption demand increases with the level of income.

question

consumption function relation to level of Income

answer

Y^=C^

question

c bar

answer

Represents the level of consumption when income is zero.

question

slope of consumption function

answer

MPC

question

c=cbar+cY

answer

consumption function

question

small c

answer

small c is the mpc

question

c(bar)

answer

autonomous consumption means the income level is zero

question

small c / MPC function

answer

MPC= change C/ Change Y

question

consumption function = autonomous consumption

answer

c= c bar because

when the income is zero c=c bar+(0)y.

question

C change / Y change

answer

for every dollar increase in income the level of consumption rises by C.

question

MPC (marginal propensity to consume)

answer

The MPC is the increase in consumption per unit increase in income.

question

Income that is not spent on consumption is saved

answer

s=y-c

question

budget constraint

answer

the limit on the consumption bundles that a consumer can afford

S=Y-C

1 of 17

question

Aggregate Demand

answer

the amount of goods and services in the economy that will be purchased at all possible price levels

question

aggregate demand equation

answer

AD=C+I+G+NX

question

What is equilibrium?

answer

when quantity of output produced=quantity demanded

question

Equilibrium

answer

Y=AD

Y= C+I+G+NX

question

consumption function

answer

the relationship between consumption spending and disposable income.

Consumption demand increases with the level of income.

question

consumption function relation to level of Income

answer

Y^=C^

question

c bar

answer

Represents the level of consumption when income is zero.

question

slope of consumption function

answer

MPC

question

c=cbar+cY

answer

consumption function

question

small c

answer

small c is the mpc

question

c(bar)

answer

autonomous consumption means the income level is zero

question

small c / MPC function

answer

MPC= change C/ Change Y

question

consumption function = autonomous consumption

answer

c= c bar because

when the income is zero c=c bar+(0)y.

question

C change / Y change

answer

for every dollar increase in income the level of consumption rises by C.

question

MPC (marginal propensity to consume)

answer

The MPC is the increase in consumption per unit increase in income.

question

Income that is not spent on consumption is saved

answer

s=y-c

question

budget constraint

answer

the limit on the consumption bundles that a consumer can afford

S=Y-C

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Income and Spending

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