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Chapter 12 Terms 101 - John Maynard Keynes The first...

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John Maynard Keynes: The first mathematician to accurately measure all goods and services produced in the economy during the year. (on the demand side) The importance of GDP as a measuring tool: Supply and demand allocates our resources based on who can pay the average price for the good or service. However, supply and demand does not keep track of where the good or service went and/or how much raw materials (factors of production) were used up in the manufacturing process. Autonomous consumption: The amount of planned consumption that does not depend on disposable income. Also called automatic consumption because this is the amount of money you will spend simply by existing. Average Propensity to Consume (APC): Consumption divided by disposable income; the proportion of total disposable income that is consumed. Average Propensity to Save (APS): Saving divided by disposable income; the proportion of total disposable income that is saved.
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