demand will fall and will in turn lower total savings
in the population because of the decrease in
consumption and economic growth.
life-cycle hypothesis
typically a persons MPC is
high during young adulthood. decreases during the
middle-age years, and increases near or during
retirement
Multiplier Effect
Occurs when a single economic
choice or policy has repercussions, ripples, or a
chain reaction.
Accelerator Principle
A higher Rate of Growth in
Real GDP leads to higher planned Investment
Spending and Vice Versa
Short-run Phillips curve shifts up with increases in
expected rate of inflation
Short-run Phillips Curve shifts down with decreases
in expected rate of inflation
The money demand curve is upward sloping
because the opportunity cost of holding money
rises as the interest rate rises.
Currency in the U.S. today is fiat money.
Examples of M1’s Cash, Checking account
(checkable bank deposits), travelers checks
When should you decrease taxes? Recessionary
Consumption goes down during a Recessionary
According to the wealth effect, when money pricesdecrease, the purchasing power of assets increases and consumer spending increases.What is the multiplier? 1/(1-MPC)
An increase in saving will increase the rate of economic growth in the long-run.
A price floor is designed to what? Keep prices high
The economist whose writings in the 1930's concluded that the cause of an economic depression is inadequate spending
Fiscal policy involves
Recession are periods when
The alternation between recessions and expansions is know as the
If wages grew at a 5% rate last year and average prices grew at a 3% rate, then the average worker
According to the circular-flow diagram which of the following economic agents engages in consumer spending
The best currently available measure of the standard of living in a country

The rule of 70 states that a variable's approximate
doubling time equals
70 divided by growth rate
The aggregate production function does NOT
depend on which of the following
The state of technology
Growth accounting enable us to
Calculate the effects of technological progress on
economic growth
The convergence hypothesis says that
Differences in real GDP per capita among
countries tend to narrow over time
Investment spending refers to
Buying stocks

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- Spring '08
- Rawlins
- Macroeconomics, Inflation