Macro Economics Chapter 08 Key Words Flashcards Preview

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Flashcards in Macro Economics Chapter 08 Key Words Deck (12):
1

autonomous consumption

Consumption that is independent of the level of disposable income.

2

aggregate expenditures function (AE)

The function that represents total spending in an economy at a given level of real disposable income.

3

autonomous expenditure

Spending that does not vary with the current level of disposable income.

4

classical economists

A group of economists whose theory dominated economic thinking from the 1770s to the Great Depression. They believed recessions would naturally cure themselves because the price system would automatically restore full employment.

5

consumption function

The graph or table that shows the amount households spend for goods and services at different levels of disposable income.

6

dissaving

The amount by which personal consumption expenditures exceed disposable income.

7

investment demand curve

The curve that shows the amount businesses spend for investment goods at different possible rates of interest.

8

John Maynard Keynes

British economist (1883–1946) whose influential work offered an explanation of the Great Depression and suggested, as a cure, that the government should play an active role in the economy.

9

marginal propensity to consume (MPC)

The change in consumption resulting from a given change in real disposable income.

10

marginal propensity to save (MPS)

The change in saving resulting from a given change in real disposable income.

11

saving

The part of disposable income households do not spend for consumer goods and services.

12

Say’s Law

The theory that supply creates its own demand.

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