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macro notes12
notes chapter 12 study flashcards
| Question | Answer |
|---|---|
| what does this stand for: C, I, G, and NX | consumption, planned investment, government purchases, and net exports |
| what would happen if the aggregate expenditure is equal to the GDP | inventory wouldn't change and the economy would be in macroeconomic equilibrium |
| what would happen if the aggregate expenditure is less than GDP | inventor would rise and the GDP and employment would decrease |
| what would happen if the aggregate expenditure is greater than GDP | inventory would fall and the GDP and employment would rise |
| what happens when economist forecast the aggregate expenditure is declining | the federal government may implement macroeconomic policies |
| what affects the level of consumption | (current disposable income) (household wealth) (expected future income) (the price level) (the interest rate) |
| what it the equation for Marginal Propensity to Consume | change in consumption/ change in disposable income |
| what does the Marginal Propensity to Consume calculate | the slope of the production function |
| what it the equation for disposable income | disposable income = national income - net taxes |
| what it the equation for national income | national income = GDP = disposable income + net taxes |
| what affects the level of investment | (expectations of future profitability) (interest rate) (taxes) (cash flow) |
| in a real government purchase, what level(s) of government does it affect | all levels. federal, state, and local |
| what is the equation for net exports | exports - imports |
| what affects net exports | (price level) (growth rate) the U.S. dollar exchange rate) |
| what happens if the U.S price level rises faster than foreign price levels | US net exports will decrease |
| what happens if the U.S price level rises slower than foreign price levels | US net exports will increase |
| what happens if the US GDP grows faster than foreign GDP | US net exports will decrease |
| what happens if the US GDP grows slower than foreign GDP | US net exports will increase |
| what happens if the US dollar rises in value relative to other currencies | US net exports will decrease |
| what happens if the US dollar falls in value relative to other currencies | US net exports will increase |
Created by:
carry
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