8.5 Key Terms
Key Terms
The current value of all the finished goods and services in the economy. AE=C+I+G+NX
The level of consumption when income is zero showing the amount of consumption independent of income.
All the components of aggregate expenditure which do not vary with national income.
Household consumption depends on a number of factors: disposable current and future income, household wealth, the real interest rate, and price levels.
The relationship between income and consumption.
Consumption minus imports.
The relationship between real GDP and investment levels.
When the aggregate expenditure equals the GDP. This occurs when what is being produced is equal to what is being sold.
The share (or percentage) of the additional income a person decides to consume (or spend).
The percentage change in spending on imports when national income changes.
The share of the additional income the person decides to save.
Changes in any category of expenditure have a more than proportional impact on GDP.
Assets minus liabilities.
