Chapter 4 - National Income and Price Determination

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9 Terms

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consumption function
The ________ is in relation to a households current disposable income to its consumers spending.
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Direct
________ increases in investment spending will result in a corresponding increase in the income value of aggregated output.
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life cycle hypothesis
The ________, an influential economic model of how consumers make spending vs saving decisions, emphasizes the impact of wealth on spending.
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vertical intercept
The ________ A, or aggregate autonomous consumer spending, grows when aggregate wealth rises- for example, as a result of a rising stock market.
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leftward shift
A(n) ________ of the aggregate demand curve, which shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world, is what economists refer to when they talk about a negative demand shock to the economy as a whole.
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growth rate
A higher projected future real GDP ________ leads to greater planned investment expenditure, whereas a lower expected future real GDP ________ leads to lower planned investment spending.
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marginal propensity
The ________ to consume, or MPC, is the amount of money spent by a household for every additional dollar of current disposable income.
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total change
The ________ in real GDP that is caused by an autonomous change in aggregate spending can be calculated by using the following formula:
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consumption function
The slope of any line is "rise over run, "with the rise representing an increase in consumer expenditure and the run being an increase in the total discretionary income for the ________.