Macroeconomics

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Author:
damea134
ID:
225727
Filename:
Macroeconomics
Updated:
2013-07-03 19:09:01
Tags:
Chapter 21
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Description:
Flash cards from Principles Of Macroeconomics 6th Edition Mankiw
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  1. automatic stabilizers
    changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action

    EX
  2. crowding-out effect
    the offset in aggregate demand that results when expansionary fiscal policy raises the interest rate and thereby reduces investment spending
  3. fiscal policy
    the setting of the level of government spending and taxation by government policymakers
  4. multiplier effect
    the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending
  5. theory of liquidity preference
    Keynes's theory that the interest rate adjusts to bring money supply and money demand into balance

    equalibrium
  6. Marginal propensity to Consume/Save
    Fraction of incomes that that households consume rather than save.

    MPC = (Change in Cosumption C)/(Dispoasal income DI)

    MPS = (Change in Saving S)/(Dispoasal income DI)

    MPC = MPC x Rise income

    MPC = 0.8 x 100 = 80
  7. Simple Spending Multiplier
    SSM= 1/1-MPC

    SSM effect = (1/1-MPC) x (Change in NX)

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