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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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Lesson 12: Business Cycles | Unit 2: A Simple Cycle
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Page: 7 of 26
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Contractions generally last about a year, but some have persisted for 1 1/2 years and some end after six months.- A contraction, also termed recession, is the decline of real GDP, from A to B.
- A contraction is officially designated as at least six months of declining economic activity.
- The 1930s Great Depression had two contractions, one lasting 43 months.
- A contraction takes the economy from above the long-run trend to below the long-run trend. The long-run trend is full-employment production.
- Below the long-run trend resources are not fully employed, unemployment increases.
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SAVING FUNCTION A mathematical relation between saving and income by the household sector. The saving function can be stated as an equation, usually a simple linear equation, or as a diagram designated as the saving line. This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics. The two key parameters of the saving function are the intercept term, which indicates autonomous saving, and the slope, which is the marginal propensity to save and indicates induced saving. The injections-leakages model used in Keynesian economics is based on the saving function.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages hoping to buy either a flower arrangement for that special day for your mother or a New York Yankees baseball cap. Be on the lookout for pencil sharpeners with an attitude.
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Natural gas has no odor. The smell is added artificially so that leaks can be detected.
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"Experience keeps a dear school, but fools will learn in no other. " -- Benjamin Franklin
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LPG
Liquid Petroleum Gas
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