MCC Economics Cure Chpt.9
Terms
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- What does the letters (MPC) stand for?
- Marginal Propensity to CONSUME
- What does the letters (MPS) stand for?
- Marginal Propensity to SAVE
- What does the letter (C) stand for?
- Consume
- What does the letter (S) stand for?
- Save
- What does the letters (DI) stand for?
- Disposable Income
- What is the definition or meaning to MPC?
- The proportion, or fraction, of any change in income consumed.
-
FORMULA:
What does
MPC = ? -
*Change In Consumption
MPC=_____________________
Change in Income -
FORMULA:
What does
MPS= ? -
*Change In saving
MPS=_____________________
Change in Income - The sum of MPC & MPS for any change in disposable income must always be...#?
- 1
- The fraction consumed (MPC) & the fraction saved (MPS) must always exhaust...
-
WHOLE CHANGE IN INCOME
e.g.
MPC+MPS=1 -
How is a MPC figured calculated?
*Don't forget the DELTA -
Delta(C)/Delta(GDP=DI) or,
Change in CONSUMPTION (divided by) a Change in the Level of output & Income -
How is a MPS figured calculated?
*Don't forget the DELTA -
Delta(S)/Delta(GDP=DI) or,
Change in SAVINGS(divided by) a Change in the Level of output & Income - What does the term DELTA infer?
- Change, a deviation between two figures
- What 2 charts do we use to find the BREAK EVEN INCOME?
- The consumption & savings schedule
- In the conumption schedule chart, which(XY) position of the chart is consumption?
- Left
- In the consumption schedule chart, which(XY) position of the chart is Disposable income?
- Bottom
- In a consuption schedule, what reference line & ° must be drawn first from the point where (DI) & (C) intersect?
- a 45 degree line
- What 2 items of data must be used to create a consumption slope for the chart?
- (GDP=DI) & (C)
- What chart must be created in order to create a Saving Schedule chart?
- Consumption Schedule
- What intersection point from the Consumption schedule must we use in order to create a Savings schedule slope?
- Break even point
- In a the Savings Schedule chart, what 2 values are used to construct the chart slope?
- (S) Savings; & (DI) Disposable Income
- In a the Savings Schedule chart, (DI) is on what part of the chart?
- Bottom
- In a the Savings Schedule chart, (S) is on what part of the chart?
- Left
- What is the "Multiplier Effect?"
- a change in a component of total spending which leads to a larger change in GDP
- What does the Multiplier Effect value equal to?
-
Multiplier =
Change in REAL GDP
__________________
Initial Change in Spending - The MPC and the Multiplier are...
- DIRECTLY Related
- The MPS and the Multiplier are...
- INVERSELY Related
- What is the Multiplier Formula for MPC?
-
M =____1____
1 - MPC - What is the Multiplier Formula for MPS?
-
M =____1____
MPS - The expected rate of return is?
- (Profit) - (Investment)