Chapter 12 MyEconLab – Flashcards
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If the government raises the amount of taxes, holding everything else constant, then
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disposable income will decrease
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The relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) can best be described as
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MPC+MPS=1, MPC=1-MPS, MPS=1-MPC
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Disposable income is equal to
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national income minus net taxes
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Would a larger multiplier lead to more severe recessions or less severe recessions?
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A larger multiplier means that small changes in spending lead to large changes in GDP, and thus recessions would be more severe.
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The multiplier means the
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total amount of additional increases in consumption spending induced by an initial change in aggregate expenditure.
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The multiplier ignore the effect on Real GDP of
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imports, inflation, and interest rates
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The larger the MPC, the more additional _ that occurs
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consumption
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A decrease in autonomous spending decrease real GDP by
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a multiple of the change
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When the value of the multiplier increases, all else equal, a change in expenditure will raise aggregate expenditure by a _ amount
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larger
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The value of the multiplier is larger when
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the value of the MPC is larger
