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INDUCED GOVERNMENT PURCHASES: Government purchases that depend on income or production (especially national income or gross national product). An increase in national income triggers an increase in induced government purchases. Induced government purchases is graphically depicted as the slope of the government purchases line and is measured by the marginal propensity for government purchases. The induced relation between income and government purchases, as well as other induced expenditures, form the foundation of the multiplier effect triggered by changes in autonomous expenditures.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 15 of 23
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- That modern banks practice fractional-reserve banking, which is the key to money creation.
- That any reserves over those required to meet a given percentage are called excess reserves, which are used by banks to make loans, increase checkable deposits, and create money.
- That when a bank receives a deposit, two things happen: the bank adds to vault cash, or reserves, and it adds to its liabilities, the customer's account.
- That when a check is cleared reserves are transferred from one bank to another.
- That when banks makes loans, they create deposits, and create money.
- That the amount of checkable deposits created is a multiple of the amount of excess reserves obtained by the banking system.
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AVERAGE PROPENSITY TO SAVE The proportion of household income that is used for saving. The average propensity to save (abbreviated APS) is really nothing more than average saving. Together with the average propensity to consume, it indicates how a given level of income is divided between consumption and saving. A related saving measure is the marginal propensity to save.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"always remember an epitaph which is in the cemetery at Tombstone, Arizona. It says: „Here lies Jack Williams. He done his damnedest.¾ I think that is the greatest epitaph a man can have ‚ When he gives everything that is in him to do the job he has before him. That is all you can ask of him and that is what I have tried to do. " -- Harry Truman, 33rd US president
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MSE
Mean Square Error
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