VocabularyTerms2

VocabularyTerms2 - ECON 0110-Introduction to Macroeconomics...

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ECON 0110—Introduction to Macroeconomics Vocabulary Chapter 9—Aggregate Expenditure Components Consumption function— the relationship between consumption and income, other things constant Marginal propensity to consume (MPC)— the fraction of a change in income that is spent on consumption; the change in consumption divided by the change in income that caused it Marginal propensity to save (MPS)— the fraction of a change in income that is saved; the change in saving divided by the change in income that caused it Saving function— the relationship between saving and income, other things constant Net wealth— the value of assets minus liabilities Life cycle model of consumption and saving— young people borrow, middle agers pay off debts and save, and older people draw down their savings; on average net savings over a lifetime is small Investment function— the relationship between the amount businesses plan to
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This note was uploaded on 04/13/2008 for the course ECON 0110 taught by Professor Kenkel during the Spring '08 term at Pittsburgh.

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VocabularyTerms2 - ECON 0110-Introduction to Macroeconomics...

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