Term
| Marginal Propensity to Consume (MPC) = |
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Definition
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Term
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Definition
1 / (1 - MPC)
Provides insight to the magnitude of cyclical ups and downs
The required change in G to close an output gap |
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Term
| How much AD curve shifts and Direction = |
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Definition
Multiplier X Increase/Decrease in (G,I,Co)
Increase = Right Shift
Decrease = Left Shift |
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Term
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Definition
| Gap = Multiplier X Δ(G,NX,I,Co) |
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Term
| 2nd Way To Determine Multiplier |
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Definition
| ΔY / Δ(G,NX,Io,I) = Multiplier |
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Term
| Marginal Propensity to Save = |
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Definition
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Term
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Definition
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Term
| If Y changes, how much will people spend and save |
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Definition
MPC X ΔY = Consumption
MPS X ΔY = Saved
Consumption + Saved = ΔY |
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