econtest2 - 1. Spending Multiplier-Idea that an initial...

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1. Spending Multiplier-Idea that an initial amount of spending (usually by the government) leads to increased consumption spending and so results in an increase in national income. Tax Multiplier-A measure of the change in aggregate production caused by changes in government taxes 2. Rule of 70- The output will double by 70/x years. X is the percentage rate of growth. 3. Aggregated Demand-Relationship between the level of prices and the quantity of real GDP demanded. 4. Gold Standard-Monetary system in which gold backs up paper money 5. Present Value-Maximum amount a person is willing to pay today to receive a payment in the future. Net Present Value- The difference between the present value of cash inflows and the present value of cash outflows. 6. Capital deepening-Increases in the stock of capital per worker. 7. Marginal Propensity to consume-The fraction of additional income that is spent Marginal Propensity to Save- The Fraction of additional income that is saved. 8. M1-The sum of the currency in the hands of the public, demand and checkable deposits and
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econtest2 - 1. Spending Multiplier-Idea that an initial...

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