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AP Macroeconomiics

Learning the large quality of the government.

QuestionAnswer
What is APC? Average Propensity to Consume (APC): Declines as income increases
What is APS? The formula for calculating average propensity to save
What is MPC? Marginal Propensity to Consume (MPC): Constant at all levels of income
What is MPS? Marginal Propensity to Consume = Consumption Change / Income change.
What is the Multiplier Effect? the expansion of a country's money supply that results from banks being able to lend
Define Aggregate Demand? is the total demand for final goods and services in the economy (Y) at a given time and price level.
What is Determinants of AD? Changes in the following non-price level factors or determinants cause changes in aggregate demand and shifts of the entire aggregate demand (AD) curve.
Aggregate Supply is the total supply of goods and services that firms in a national economy plan on selling during a specific time period.
What is Determinants of AS? measures the volume of goods and services produced within the economy at a given overall price level
Expansionary Fiscal Policy The goal of expansionary fiscal policy is to close a recessionary gap, stimulate the economy, and decrease the unemployment rate. Expansionary fiscal policy is often supported by expansionary monetary policy.
Contractionary Fiscal Policy is to close an inflationary gap
Crowding-out effect occurs when Expansionary Fiscal Policy causes interest rates to rise, thereby reducing private spending.
Created by: dbzjenny
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