Econ 202 final exam pt2 NDSU
Marginal Propensity to Consume (MPC) - Answer-consumer spending/disposable income
Marginal Propensity to Save - Answer-1-MPC
Autonomous change in aggregate spending - Answer-An initial rise or fall in aggregate spending at a
given level of real GDP
multiplier - Answer-the ratio of the total change in real GDP caused by an autonomous change in
aggregate spending to the size of that autonomous change.
consumption function - Answer-equation showing how an individual household's consumer spending
varies with the household's disposable income
aggregate consumption function - Answer-the relationship for the economy as a whole between
aggregate disposable income and aggregate consumer spending.
Planned investment spending - Answer-the investment spending that businesses intend to undertake
during a given period.
Inventories - Answer-stocks of goods held to satisfy future sales.
inventory investment - Answer-the value of the change in total inventories held in the economy during a
given period.
, unplanned inventory investment - Answer-unplanned changes in inventories occurring when actual sales
are more or less than businesses expected.
actual investment spending - Answer-the sum of planned investment spending and unplanned inventory
investment.
planned aggregate spending - Answer-the total amount of planned spending in the economy.
income-expenditure equilibrium - Answer-when aggregate output (real GDP) is equal to planned
aggregate spending.
keynesian cross - Answer-an event that suddenly increases or decreases the supply of a commodity or
service
aggregate demand curve - Answer-the relationship between the aggregate price level and the quantity
of aggregate output demanded by households, businesses, the government, and the rest of the world.
aggregate supply curve - Answer-shows the relationship between the aggregate price level and the
quantity of aggregate output in the economy.
nominal wage - Answer-the dollar amount of the wage paid.
sticky wages - Answer-nominal wages that are slow to fall even in the face of high unemployment and
slow to rise even in the face of labor shortages.
short-run aggregate supply curve - Answer-one of two curves that graphical capture the supply-side of
the aggregate market.
Marginal Propensity to Consume (MPC) - Answer-consumer spending/disposable income
Marginal Propensity to Save - Answer-1-MPC
Autonomous change in aggregate spending - Answer-An initial rise or fall in aggregate spending at a
given level of real GDP
multiplier - Answer-the ratio of the total change in real GDP caused by an autonomous change in
aggregate spending to the size of that autonomous change.
consumption function - Answer-equation showing how an individual household's consumer spending
varies with the household's disposable income
aggregate consumption function - Answer-the relationship for the economy as a whole between
aggregate disposable income and aggregate consumer spending.
Planned investment spending - Answer-the investment spending that businesses intend to undertake
during a given period.
Inventories - Answer-stocks of goods held to satisfy future sales.
inventory investment - Answer-the value of the change in total inventories held in the economy during a
given period.
, unplanned inventory investment - Answer-unplanned changes in inventories occurring when actual sales
are more or less than businesses expected.
actual investment spending - Answer-the sum of planned investment spending and unplanned inventory
investment.
planned aggregate spending - Answer-the total amount of planned spending in the economy.
income-expenditure equilibrium - Answer-when aggregate output (real GDP) is equal to planned
aggregate spending.
keynesian cross - Answer-an event that suddenly increases or decreases the supply of a commodity or
service
aggregate demand curve - Answer-the relationship between the aggregate price level and the quantity
of aggregate output demanded by households, businesses, the government, and the rest of the world.
aggregate supply curve - Answer-shows the relationship between the aggregate price level and the
quantity of aggregate output in the economy.
nominal wage - Answer-the dollar amount of the wage paid.
sticky wages - Answer-nominal wages that are slow to fall even in the face of high unemployment and
slow to rise even in the face of labor shortages.
short-run aggregate supply curve - Answer-one of two curves that graphical capture the supply-side of
the aggregate market.
