Term
| Aggregate demand (AD) curve |
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Definition
| A curve that shows the relationship between the price level and the level of planned aggregate expenditure in the economy, holding constant all other factors that affect aggregate expenditure |
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Term
| Aggregate expenditure (AE) |
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Definition
| Total spending in the economy: the sum of consumption, planned investment, government purchases, and net exports |
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Term
| Aggregate expenditure model |
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Definition
| A macroeconomic model that focuses on the short-run relationship between total spending and real GDP, assuming that the price level is constant |
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Term
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Definition
| An expenditure that does not depend on the level of GDP |
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Term
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Definition
| The difference between the cash revenues received by a firm and the cash spending by a firm |
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Term
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Definition
| The relationship between consumption spending and disposable income |
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Term
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Definition
| Goods that have been produced but not yet sold |
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Term
| Marginal propensity to consume (MPC) |
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Definition
| The slope of the consumption function: The amount by which consumption spending changes when disposable income changes |
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Term
| Marginal propensity to save (MPS) |
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Definition
| The amount by which saving changes when disposable income changes |
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Term
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Definition
| The increase in equilibrium real GDP divided by the increase in autonomous expenditure |
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Term
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Definition
| The process by which an increase in autonomous expenditure leads to a larger increase in real GDP |
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