MGEA05H3 Chapter Notes - Chapter 11: Disposable And Discretionary Income, Permanent Income Hypothesis, Retained Earnings

156 views3 pages
kkweiss24 and 39095 others unlocked
MGEA05H3 Full Course Notes
9
MGEA05H3 Full Course Notes
Verified Note
9 documents

Document Summary

Marginal propensity to consume (mpc): is the increase in consumer spending when disposable income rises by . Mpc is a positive fraction less than 1, i. e. 0 < mpc < 1. Because consumers normally spend part but not all of an additional dollar of disposable income, mpc is a number between 0 and 1. Mpc = change in consumer spending / change in disposable income. Marginal propensity to save (mps): is the increase in household savings when disposable income rises by . Mps is also positive fraction less than 1, i. e. 0 < mps < 1, and mpc + mps. Autonomous change in aggregate expenditure (ae0): is an initial change in the desired level of spending by firms, households, or government at a given level of real gdp. Multiplier: is the ratio of the total change in real gdp caused by an autonomous change in aggregate expenditure to the size of that autonomous change.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions