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A positively sloped relationship between real consumption spending and real disposable income
Autonomous consumption spending
The part of consumption spending that is independent of income; also the vertical intercept of the consumption function
Marginal propensity to consume
The amount by which consumption spending rises when disposable income rises by one dollar
A line showing aggregate consumption spending at each level of income or GDP
Aggregate Expenditure (AE)
The sum of spending by households, business firms, the government, and foreigners on final goods and services produced in the United States
In the short run, the level of output at which output and aggregate expenditure are equal
The amount by which equilibrium real GDP changes as a result of a one-dollar change in autonomous consumption, investment spending, government purchases, or net exports
A feature of the economy that reduces the size of the expenditure multiplier and diminishes the impact of spending changes on real GDP
Countercyclical fiscal policy
A change in government purchases or net taxes designed to reverse or prevent a recession or a boom
The total amount the federal government still owes to the general public from past borrowing
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