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Macro Exam 3
Key Terms Chapter 14
7
Economics
Undergraduate 2
12/02/2009

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Term
Aggregate Planned Expenditure
Definition
Planned consumption expenditure plus investment expenditure plus planned government expenditure plus planned exports minus planned imports
Term
Autonomous Expenditure
Definition
The components of aggregate expenditure that do not change when real GDP changes.
Term
Induced Expenditure
Definition
The components of aggregate expenditure that change when real GDP changes
Term
Consumption Function
Definition
The relationship between consumption expenditure and disposible income, other things remaining the same
Term
Marginal Propensity to Consume
Definition
The fractionof a change in disposible income that is spent on cunsumption-the change in cunsumption expenditure divided by the change in disposible income that brought it about.
Term
Equilibrium Expenditure
Definition
The level of aggregate expenditure that occurs when aggregate planned expenditure equals real GDP.
Term
Marginal Tax Rate
Definition
THe fraction of a change in real GDP that is paid in income taxes-the change in tax payments divded by the change in real GDP
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