Macroeconomics 200 exam #2 - Custom Scholars
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# Macroeconomics 200 exam #2

question
consumption function
the. relationship between consumption spending and the level of income
C = Ca+ by
question
autonomous consumption
the part of consumption that does not depend on income
it does not directly depend on the level of income.
question
marginal propensity to consume (MPC)
-the fraction of additional income that is spent.
-has a value of b in our formula
-tells us how much consumption spending will increase for every dollar that income increases.
question
An increase in autonomous consumption
shifts the consumption function upward
question
An increase in the MPC increases
the slope of the consumption function.
question
Two other factors that cause autonomous consumption to change.
Increase in consumer wealth and consumer confidence.
question
the level of total planned expenditures
C+I
question
equilibrium output function
(autonomous consumption + investment)/ (I - MPC)

or

y* =(Ca+ I)/(1 - b)
question
Savings equation
disposable income - consumption
S= (y-C)
question
multiplier function
multiplier= 1/ (1-MPC)
question
Saving =
GDP - Consumption
question
Equation to get the multiplier.
1/(1-MPC)
question
MPC
the slope of the consumption function
question
equilibrium output
(autonomous consumption + investment) / (1-MPC)
question
You get equilibrium output when?
The C + I line intersects the 45 degree line.
1 of 15
question
consumption function
the. relationship between consumption spending and the level of income
C = Ca+ by
question
autonomous consumption
the part of consumption that does not depend on income
it does not directly depend on the level of income.
question
marginal propensity to consume (MPC)
-the fraction of additional income that is spent.
-has a value of b in our formula
-tells us how much consumption spending will increase for every dollar that income increases.
question
An increase in autonomous consumption
shifts the consumption function upward
question
An increase in the MPC increases
the slope of the consumption function.
question
Two other factors that cause autonomous consumption to change.
Increase in consumer wealth and consumer confidence.
question
the level of total planned expenditures
C+I
question
equilibrium output function
(autonomous consumption + investment)/ (I - MPC)

or

y* =(Ca+ I)/(1 - b)
question
Savings equation
disposable income - consumption
S= (y-C)
question
multiplier function
multiplier= 1/ (1-MPC)
question
Saving =
GDP - Consumption
question
Equation to get the multiplier.
1/(1-MPC)
question
MPC
the slope of the consumption function
question
equilibrium output
(autonomous consumption + investment) / (1-MPC)
question
You get equilibrium output when?
The C + I line intersects the 45 degree line.

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