Macroeconomics-Chap-9-10-11

Card Set Information

Author:
Anonymous
ID:
243973
Filename:
Macroeconomics-Chap-9-10-11
Updated:
2013-10-30 16:09:17
Tags:
Test
Folders:

Description:
Prep for test 3
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Anonymous on FreezingBlue Flashcards. What would you like to do?


  1. Say's Law
    Supply creates its own demand. Production creates enough demand to purchase all the goods and services produced.
  2. Recessionary Gap
    The condition in which the Real GDP that the economy is producing is less that the Natural Real GDP and the unemployment rate is greater than the natural unemployment rate.
  3. Inflationary Gap
    The condition in which the Real GDP that the economy is producing is greater than the Natural Real GDP and the unemployment rate is less than the natural unemployment rate.
  4. Laissez-Faire
    A public policy of not interfering with market activities in the economy.
  5. Efficiency Wage Models
    Models holding that it is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates.
  6. Consumption Function
    • The relationship between consumption and disposable income. In the consumption function used in this text, consumption is directly related to disposable income and is positive even at zero disposable income. 
    • C=C0+(MPC)(Yd)
  7. Marginal Propensity to Consume (MPC)
    • The ratio of the change in consumption to the change in disposable income
    • MPC= ΔC 
    •         ΔYd
  8. Autonomous Consumption
    The part of the consumption that is independent of disposable income.
  9. Marginal Propensity to Save (MPS)
    • The ratio of the change in saving to the change in disposable income: 
    • MPS= ΔS 
    •         ΔYd

What would you like to do?

Home > Flashcards > Print Preview