VCC Economics Test 2 Study Guide

VCC Economics Test 2 Study Guide - Macro Economics Test 2...

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Macro Economics – Test 2 Study Guide 84 questions on test Micro-economics – deals with the individual (individual market, individual consumer). The economic analysis of the individual. Keynesian economics – deals with the aggregate expenditure model. This is macro-economics. GDP = C + Ig + Xn + G Consumption – The single largest component of the aggregate expenditure model. Savings – high saving rates lead to higher investment in capital equipment. Disposable income goes up = consumption and savings go up. Regarded as the leakage out of the aggregate expenditure model. Multiplier – the reciprocal of the marginal propensity to save. Multiplier and marginal propensity to save are inversely related. Disposable income/savings – disposable income is the basic determinate of savings. DI = C + S. Investment – ¼% increase in capital equipment will lead to a 1% increase in productivity. Investment in capital goods is influenced by interest and opportunity cost. Dollar appreciates – strong dollar on the world market buys more foreign currency. Dollar depreciates – weak dollar on the world market buys less foreign currency. Determinants of aggregate demand – things that cause the entire price schedule to shift to the right or left other than price. Net worth or personal wealth.
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This note was uploaded on 07/23/2010 for the course BUS ECO2013 taught by Professor Dr.chase during the Fall '09 term at Valencia.

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VCC Economics Test 2 Study Guide - Macro Economics Test 2...

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