ECON 1020H Study Guide - Final Guide: Knowledge Management, Business Cycle, Quantitative Easing
10 Apr 2017
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All income is either consumer or saved ( y = c + s ) Marginal propensity to consume + marginal propensity to save = 1 or ( mpc + mps = 1 ) The value of the multiplier depends on how much money is left in the economy to roll around. (the more consumed, the higher the multiplier) Applying the multiplier: intiital effect x k = ultimate effect. Normative statements: claims that prescribe how the world should be (bias) Positive statements: claims that describe how the world is (can be tested) Absolute advantage: produce all goods using less inputs. Comparative advantage: production of the good has lowest opportunity cost. National income = gross domestic product or gdp. Gdp is the market value of all the final goods and services produced within a country in a given time period. Real gdp: value of the final goods and services produced in a given year when valued at constant prices.
