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APC: The abbreviation for average propensity to consume, which is the proportion of income, usually measured as disposable income or national income, used for household consumption expenditures. It is found by dividing consumption by income. The average propensity to consume, abbreviated APC, most often pops up in discussions of Keynesian economics. The average propensity to consume is the average amount of total household income that is devoted consumption expenditures.

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Lesson 11: Circular Flow | Unit 2: Financial Markets Page: 10 of 22

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  • The main function of financial markets, which is to divert national income from household consumption to business investment.
  • The difference between the real or physical side of the economy (the production of goods that satisfy wants and needs) and the paper or financial side (legal claims on or ownership of physical resources, goods, and production).
  • How income is diverted from legal-claim buyer to legal-claim seller through the financial markets.
  • Why saving can be thought as a nonconsumption use of income, as making a loan, or as supplying income to the financial markets in exchange for a legal claim.
  • Two basic reasons to save: (1) in return for an interest payment or (2) to accumulate income that can be spent later.
  • Investment, which is business sector expenditures on gross domestic product for capital goods.
  • How the business sector borrows income through financial markets and uses this income flow to finance capital investment.
  • Why adding saving, investment, and financial markets does not change the total volume of the circular flow.
  • That imbalances between saving and investment trigger economic stability, business cycles, unemployment, and inflation.

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PRICE CHANGE, UTILITY ANALYSIS

A disruption of consumer equilibrium identified with utility analysis caused by changes in the price of a good, which likely results in a change in the quantities of the goods consumed. The change in the price alters the marginal utility-price ratio and forces a reevaluation of the rule of consumer equilibrium.

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Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club wanting to buy either a small, foam rubber football or an instructional DVD on learning to the play the oboe. Be on the lookout for jovial bank tellers.
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
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