Term
| Aggregate Expenditure(AE) |
|
Definition
| the total amount spent for final goods and services in an economy |
|
|
Term
| Autonomous expenditure(Ea) |
|
Definition
| refers to the point in your expenditure that is not dependent on your income |
|
|
Term
| Marginal proprnsity to expand(mpey) |
|
Definition
| refers to the function spent from an additional dollar of income |
|
|
Term
| Write the Consumption function and explain its components. |
|
Definition
C = C + mpcY
C = automous consumption
mpcy = induced consumption
mpc = marginal propensity to consume
Y = disposable income |
|
|
Term
|
Definition
| the difference between equillbrium income and potential income when potential income is higher that equilibrium income |
|
|
Term
|
Definition
| the difference between wquilibrium income and potential income when potential income is lower that equilibrium income |
|
|
Term
|
Definition
| a number that tells us how much income will change in response to a change in (taxes, government expenditure) |
|
|
Term
|
Definition
| when potentiol income begins to grow and pull the economy out of a recission, the built in stabilizers could retard the actual economic growth |
|
|
Term
|
Definition
| the difference between government revenue and expenditure |
|
|
Term
|
Definition
| results from accumulated deficits minus accumulated surplus |
|
|
Term
|
Definition
| depicts the relationship between tax rates and tax revenues. As tax rates increase between 0 – 100% tax rates revenues will increase only upto a certain point |
|
|
Term
|
Definition
| the portion of the deficit that could be experienced when the economy is at full employment. It is due to changes in discretionary fascal policy |
|
|
Term
|
Definition
| the part of the deficit that would exist when the economy is below potential output. It occurs when government revenue falls during a recission while transfer payments increase |
|
|
Term
|
Definition
| u.s. government debt (treasury bonds) held by the u.s. households and institutions |
|
|
Term
|
Definition
| u.s. government debt (treasury bonds) held by foreign countries and institutions |
|
|
