Consumption functionA linear relationship showing how increases in disposable income cause increases in consumption. |
ContractionThe period where real gdp is falling. |
Contractionary fiscal policyDecreases in government spending or higher net taxes meant to shift the aggregate expenditure function downward and shift ad to the left. |
Contractionary monetary policyDesigned to avoid inflation by decreasing ad, which lowers the pl and gdpr. |
Crowding out effectWhen the government borrows funds to cover a deficit, the interest rate increases and households and firms are pushed out of the market for loanable funds. |
Current accountThis account shows current import and export payments of both goods and services and investment income sent to foreign investors of u.s. and investment income received by u.s. citizens who invest abroad. |
Debt financingA firm’s way of raising investment funds by issuing bonds to the public. |
Decision to investA firm invests in projects so long as the real expected real rate of return is greater than the i. |
DeflationA sustained falling pl, usually due to weakened ad and a constant as. |
Demand curveA graphical depiction of the d schedule. |