Term
| Desired Aggregate Expenditure (AE) |
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Definition
| The sum of desired or planned spending on domestic output by households, firms, governments, and foreigners. |
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Term
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Definition
| Element of expenditure that do not change systematically with national income |
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Term
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Definition
| Any component of expenditure that is systematically related to national income |
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Term
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Definition
| An economy that has no foreign trade in goods, services, or assets |
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Term
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Definition
| All disposable income that is not spent on consumption |
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Term
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Definition
| The relationship between desired consumption expenditure and all the variables that determine it; in the simplest, the relationship between desired consumption expenditure and disposable income |
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Term
| Average Propensity to Consume (APC) |
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Definition
| Desired consumption divided by the level of disposable income |
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Term
| Marginal Propensity to Consome (MPC) |
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Definition
| The change in desired consumption divided by the change in disposable income that brought it about. |
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Term
| Average Propensity to save (APS) |
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Definition
| Desired saving divided by disposable income |
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Term
| Marginal Propensity to Save (MPS) |
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Definition
| The change in desired saving divided by the change in disposable income that brought it about |
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Term
| Aggregate Expenditure (AE) Function |
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Definition
| The function that relates desired aggregate expenditure to actual national income |
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Term
| Marginal Propensity to Spend |
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Definition
| The change in desired aggregate expenditure on domestic output divided by the change in national income that brought it about |
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Term
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Definition
| The ratio of the change in equilibrium national income to the change in autonomous expenditure that brought it about, calculated for a constant price level. |
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Term
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Definition
| The use of the government's tax and spending policies to achieve government objectives |
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Term
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Definition
| Total tax revenue minus transfer payments, denoted T. |
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Term
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Definition
| The increase in net tax revenue generated when national income rises by one dollar. Also called the marginal propensity to tax. |
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Term
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Definition
| Any excess of current revenue over current expenditure |
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Term
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Definition
| Any shortfall of current revenue below current expenditure |
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Term
| Marginal Propensity to import |
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Definition
| The increase in import expenditures induced by a $1 increase in national income. Denoted by m. |
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Term
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Definition
| Any policy designed to reduce the economy's cyclical fluctuations and thereby stabilize national income |
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