Econ Test Unit 4
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
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| Disposable income | how much money you have after taxes
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| Average propensity to consume | home much you spend on average, consumption/disposable income
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| Average propensity to save | home much you save on average, savings/disposable income
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| APC + APS | = 1
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| Marginal propensity to consume | how much of each additional dollar you spend, delta consomption/delta desposable income
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| Marginal propensity to save | how much of each additional dollar is saved, delta savings/deltal disposable income
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| MPC + MPS | =1
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| spending multiplier | 1/mps
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| tax multiplier | -mpc/mps
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| the tax multiplier is always | 1 less than the spending multiplier
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| fiscal policies | government spending or tax policies
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| fiscal policies generally affect | demand
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| what can shift SRAS | less taxes, more subsidies, less regulation
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| increase LRAS? | more education, more tech, natural resources
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| deficit | when you spend more than you have this year
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| surplus | extra money
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| debt | accumulated overtime
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| Phillips curve | summary of unemployemnt and inflation when AD shifts, downward sloping
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| When AD changes there is | a movment along the Phillips curve
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| When SRAS changes there is | a movement of the Phillips curve
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| An increase in SRAS | will increase real GDP but not the price level
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| An increase in AD | will increase real GDP and price level
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| Examples of automatic stabilizers | progressive personal income tax, unemployment compensation
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| contractionary policy | reduces aggregate demand, high taxes less spending, fixes inflation
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| expansionary fiscal policy | increase AD, lower taxes more spending, fix recession
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| Discresionary | gov takes deliberate action
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| automatic | built in to ecnonomy, no new policies
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| crowding out | government increases borrowing, raising interst rates and pushing people out of the economony
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| loanable funds graph | real interst rate vs quanitity loanable funds, Supply vs Demand
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