AP Macroeconomics-Module 16 and 17

Study Guide with Complete Solutions

marginal propensity to consume (MPC) - Answer-The increase in consumer spending when income

rises by $1. Because consumers normally spend part but not all of an additional dollar of disposable

income, MPC is between 0 and 1.

marginal propensity to save (MPS) - Answer-The increase in household savings when disposable

income rises by $1

autonomous change in aggregate spending - Answer-An initial rise or fall in aggregate...
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