National Income Equilibrium

Total quantity of goods and services produced in the economy.

• Aggregate Demand

• Aggregate Supply

• Leakages

• Injections

The equilibrium level of National Income in a closed economy is where:

• MPC = APC

• Consumption equals savings

• Aggregate expenditure equal National Income.

• Unemployment rate is about 3 percent of labour force.

An economy with foreign trade is known as a/an ___.

• open economy

• closed economy

• planned economy

• laissez-faire economy

Withdrawal from the income expenditure system.

• Savings

• Consumption

• Investment

• Leakages

Addition of spending to the income- expenditure system.

• Leakage

• Saving

• Injection

• Import

Refers to the purchase of goods and services by individuals or households.

• Investment

• Export

• Import

• Consumption

Ratio of total consumption to total income.

• Marginal Propensity to Consume (MPC)

• Average Propensity to Consume (APC)

• Average Propensity to Savings (APS)

• Marginal Propensity to Savings (MPS)

Relationship between consumption level and income level.

• Investment function

• Consumption function

• Savings function

• Export function

Ratio of change in total consumption to the change in total income.

• Average Propensity to Consume (APC)

• Marginal Propensity to Consume (MPC)

• Average Propensity to Savings (APS)

• Marginal Propensity to Savings (MPS)

Dissavings is part of savings that does not depend on the level of income.

• Autonomous consumption

• Autonomous savings

• Autonomous investment

• Autonomous tax