Ch. 5 Word Scramble
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| Term | Definition |
| Gross domestic product (GDP) | the nation's expenditure on all the final goods and services produced in the country during the year at market prices. |
| What are the three main sectors of GDP | Consumption, investment, and government spending |
| the consumption function | as income rises, consumption rises, but not as quickly. A theory by John Maynard Keynes |
| Average propensity to consume (APC) | the percentage of disposable income that is spent; consumption divided by disposable income |
| Average propensity to save (APS) | the percentage of disposable income that is saved; saving divided by disposable income |
| Marginal propensity to consume (MPC) | the change in consumption divided by change in income |
| Marginal propensity to save (MPS) | is change in saving divided by change in income |
| dissaving | when consumption is greater than disposable income. Saving below 0 |
| saving function | states that as income rises, saving rises, but not as quickly |
| Autonomous consumption | the minimum amount that people will spend on the necessities of life. our level of consumption when disposable income is 0 |
| induced consumption | is spending induced by changes in the level of income |
| what happens to induced consumption when consumption rises? falls? | induced consumption rises by the same amount. falls by the same amount |
| consumption divides into three categories | durable goods, nondurable goods, and services |
| 8 basic determinants of the level of consumption | 1)Disposable income2)Credit availability3)Stock of liquid assets 4)Stock of durable goods 5)Keeping up with the Joneses 6)Maintaining a basic standard of living 7)Consumer expectations 8)The wealth effect |
| conspicuous consumption | a person's spending on frivolous goods or services, with the sole purpose of showing off one's wealth |
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