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