ECON 1010 Chapter Notes - Chapter 27: Disposable And Discretionary Income, Aggregate Demand, Consumption Function
12 Jan 2015
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Chapter 27 expenditure multipliers: the keynesian model. Saving function the relationship between saving and disposable income, other things remaining the same: autonomous consumption amount of consumption expenditure that would take place in the short run even if people had no current income. Induced consumption consumption expenditure that is induced by an increase in disposable income. Saving when consumption expenditure is less than disposable income: dissaving when consumption expenditure exceeds disposable income, marginal propensity to consume (mpc) is the fraction of a change in disposable income that is spent on consumption. Yd: marginal propensity to save (mps) - is the fraction of a change in disposable income that is saved. Yd: an increase in disposable income is either spent on consumption or saved, the mpc + Mps = 1: the slope of the consumption function is the mpc; the slope of the saving function is.
