Term
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Definition
| The total quantity of goods and services produced (or supplied) in an economy in a given period. |
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Term
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Definition
| The total income recieved by all factors of production in a given period. |
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Term
| Aggregate output (income) (Y) |
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Definition
| A combined term used to remind you of the exact equality between aggregate output and aggregate income. |
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Term
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Definition
| The relationship between consumption and income. |
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Term
| Marginal propensity to consume (MCP) |
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Definition
| That fraction of a change in income that is consumed, or spent. |
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Term
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Definition
| The part of aggregate income that is not consumed. |
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Term
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Definition
| Something that is always true. |
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Term
| Marginal propensity to save (MPS) |
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Definition
| That fraction of a change in income that is saved. |
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Term
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Definition
| Thise additions to capital stock and inventory that are planned by firms. |
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Term
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Definition
| The actual amount of investment that takes place; it includes items such as unplanned changes in inventories. |
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Term
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Definition
Occurs when there is no tendency for change
In the Macroeconomics goods market, equilibrium occurs when planned aggregate expenditure is equal to aggregate output.
AE= C + I
Equilibrium: Y=AE or Y= C + I |
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Term
| Planned aggregate expenditure (AE) |
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Definition
The total amount the economy plans to spend in a given period.
Equal to the consumption plus planned investment
AE= C + I |
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Term
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Definition
| The ratio of the change in the equilibrium lebel of output to a change in some exogenous variable. |
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Term
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Definition
| A variable that is assumed not to depdnd on the state of the economy...that is, it does not change when the economy changes. |
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