Chapter 11 - The Income-Expenditure Model

________ to Consume (MPC): The fraction of additional income that is spent.

________ need to take into account the multipliers for government spending and taxes as they develop policies.

Planned Expenditures: Another term for ________ for goods and services.

The ________ occurs where planned expenditures equal production.

The ________ focuses on changes in the level of output or real GDP.

Economists call the multiplier for ________ and taxes the balanced- budget multiplier because equal changes in ________ and taxes will not unbalance the budget.

________ is determined at the level of income where savings equal investment.

________ affect households disposable personal income- income that ultimately flows back to households after subtraction from their income of any taxes paid and after addition to their income of any transfer payments they receive, such as Social Security, unemployment insurance, or welfare.

The ________ prevent consumption from falling as much in bad times and from rising as much in good times.

An increase in government spending will increase ________ for goods and services.

________= my, where m is a fraction known as marginal propensity to import.

________ affect GDP through their influence on how other countries demand goods and services produced in the United States.

________ in consumer wealth will cause a(n) ________ in autonomous consumption.

The ________ is determined by the level of autonomous consumption and by the MPC.

________ to import: The fraction of additional income that is spent on imports.

________= (autonomous consumption + investment)/ (1- MPC) Saving and Investment.

A change in the ________ to consume will cause a change in the slope of the consumption function.

________: The level of GDP at which planned expenditure equals the amount that is produced.

_____________ = -MPC/(1-MPC)

___________________________ = C + I + G