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A: The common notation for the "intercept" term of an equation specified as Y = a + bX. Mathematically, the a-intercept term indicates the value of the Y variable when the value of the X variable is equal to zero. Theoretically, the a-intercept is frequently used to indicate exogenous or independent influences on the Y variable, that is, influences that are independent of the X variable. For example, if Y represents consumption and X represents national income, a measures autonomous consumption expenditures.
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Lesson 12: Business Cycles | Unit 4: Causes
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Page: 18 of 26
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Instability of business investment is one explanation of business cycles.- During the Great Depression, production declined by 40% and investment declined by over 90%. Did this big drop in investment cause the overall drop in production?
- Investment can trigger changes in production through the circular flow. A decrease in investment, causes a decrease in production, which reduces household income, which reduces consumption, which causes further reductions in production, income, and consumption.
- Small changes in investment can cause magnified changes in aggregate production. A $10 billion decrease in investment might cause a $50 billion decrease in GDP.
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INTERCEPT, CONSUMPTION LINE The intercept of the consumption line indicates autonomous consumption, consumption that does not depend on the level of income or production. This can be thought of as the baseline level of consumption that would be undertaken if income falls to zero. Autonomous consumption is affected by the consumption expenditures determinants, which cause a change in the intercept and a shift of the consumption line. The value of the intercept of the saving line is the negative of the value of the intercept of the saving line.
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BLUE PLACIDOLA
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Today, you are likely to spend a great deal of time at the confiscated property police auction hoping to buy either a video game player or an AC adapter that won't fry your computer. Be on the lookout for crowded shopping malls.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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IIPF
International Institute of Public Finance
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