mpc
marginal propensity to consume
mps
marginal propensity to save
mpc+mps=?
1
what is the spending multiplier
for every $1 spending in our economy a multiple of that $ will be created as money is spent and earned in successive units
formula for multiplier
1/mps or 1/1-mpc
multiplier•spending=?
real gdp
are wages sticky or flexible
sticky
in SRAS _ doesnt change _ changes
price level, national output
in short run aggregate supply is
flexible
in long run aggregate supply is
fixed
factors that cause change in SRAS are what
change in input prices
change in productivity
change in legal institution environment
what are two things that cause change in input prices
change in dometic prices
change in import prices
what is the formula for productivity
total output/total input
what is the formula for per unit production costs
total input/total output
factors that cause change in LRAS curve
change in the stock of capital
loanable funds market
LRAS= ?
full employment/full production
real balances effect
purchase more output when price level is less because the purchasing power of the dollar has risen
interest rate effect
price levels are low then interest rates are low price levels are high then interest rates are high
interest rate
the cost of money (what you pay to borrow it)
when interest rate are high prices are ___ and people tend to ___
high, save
when interest rates are low prices are ____ and people tend to___
low, spend
foreign purchases effect
when our prices are high relative to foreign countries prices we export less, import more, and sell more
nonprice determinants of aggregate demand
1) change in consumer wealth
2) change in consumer indebtedness
3) change in consumer expectations
4) change in consumer taxes
5) change in real interest rates
6) change in expected rate of return
7) government spending
8) change in national income abroad
9) change in exchange rate
expected rate of return is affected by what
change in tech
change jn excess capacity
change in expectations
change in business taxes
