MacroCH7-10
Terms
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- MPC: Marginal Propensity to Consume
- The ratio of change in consumption to the change in disposable income. MPC = ^c/^Y (y=dispose income)
- Progressive Income Tax
- an income tax system in which ones tax rises as ones taxable income rises.
- Proportional Income Tax
- An income tax system in which ones tax rate is the same no matter what ones taxable income is.
- Cyclical Deficit
- The part of the budget deficit that is a result of a downturn in economic activity.
- Structural Deficit
- The part of the budget deficit that would exist even if the economy were operation at full employment.
- Discretionary Fiscal Policy
- The deliberate changes of government expenditures and/or taxes to achieve particular economic goals.
- Automatic Fiscal Policy
- Changes in government expenditures and/or taxes that occur automatically without (additional) congressional action
- Crowding Out
- The decrease in private expenditures due to increased gov\'t spending or financing needs of a budget deficit.
- Marginal Tax Rate
- The change in a persons tax payment divided by the change in the persons taxable income. ^tax payment(divided by)^taxable income
- Aggregate Demand
- The quantity demanded of all goods & services (Real GDP) at different price levels.
- Aggregate Supply
- The quantity supplied of all goods and services at different price levels. Ceteris Peribus
- Wealth Effect
- The increase in spending that occurs because the real value of money increases when the price level decreases.
- Macro Equilibrium
- exist when the demand and supply variables affecting total economic activity are in balance and under no pressure to change.
- Recessionary Gap
- RGDP < NGDP & UNEP > NUNEP RealGDP is less than the NaturalGDP and Unemployment Rate is greater than the Natural Unemployment rate.
- Inflationary Gap
- RGDP > NRGDP & UNEP < NUNEP Real GDP is greater than the Natural GDP and the Unemployment rate is less than the Natural Unemployment rate.
- Laissez Faire
- A public policy of not interfering with market activities in the economy.
- MPS: Marginal Propensity to Save
- The ratio of the change in saving to change in disposable income. MPS = ^S/^Y (savings = s | y = disposable income)
- Full Employment GDP
- The Value of total output produced at full employment
- Multiplier Process
- M = 1/1-MPC The number that is multiplied by the change in autonomous spending to obtain the overall change in total spending.