Glossary Category: Macroeconomy - Page 7 - 3auk

marginal propensity to save (mps)

The Marginal Propensity to Save (MPS) measures the portion of each extra unit of income that households choose

The average propensity to save (APS) is the percentage of total income that households choose to save instead

The open economy multiplier calculates how much a change in initial spending will increase the total national income

The closed economy multiplier measures how an initial change in spending creates a larger final change in national

The multiplier measures how an initial change in spending—such as investment or government spending—affects the total national income.

National income determination is the process of finding the point where an economy reaches balance, also known as

AD/AS analysis of exchange rate changes examines how a change in a country’s exchange rate — either appreciation

The average rate of tax (ART) is the total tax paid divided by total income, typically expressed as

The marginal rate of tax is the proportion of additional income paid in tax, expressed as a percentage.

The equilibrium level of national income is the output level at which aggregate demand (total planned spending) equals