İKTİSADA GİRİŞ II - Deneme Sınavı - 19

Real Gross Domestic Product is the value of production with the base year’s prices.

Per capita national income is calculated by dividing the Dollar value of national income to population and used as a wealth indicator.

Saving function is the relationship between income level and saving.

Negative saving is the part of the expenditure that exceeds the income.

Autonomous consumption is the portion of consumption expenditures that is independent of income.

Marginal propensity to consume is the ratio of consumption change to income change.

Marginal propensity to save is the ratio of the saving change to the income change:

Average propensity to consume is the ratio of consumption expenditures to income.

Average propensity to save is the ratio of savings to income.

Wealth is the monetary value of all assets that households have

Export is the amount of goods and services produced in the home country and sold to other countries.

Marginal propensity to import is the ratio of change in import to change in income.

The main factor determining the consumption expenditures to be made in a given period is the income level. Along with the increase in income, the desire and purchasing power of households to make consumption expenditures also increases. This linear and positive relationship between income and consumption expenditures is called consumption function

The consumption function is the most important component of the modern macroeconomic theory. The consumption function is widely used by economists to predict an economy’s progress and the behavior of economic agents. In order to examine the relationship between income level and consumption expenditures in detail, it would be useful to work on a consumption function.

If a household spends more than its income, it has to cover the excess of expenditures by borrowing or using the savings made before. This is called negative saving.

The marginal propensity to consume is a concept of how much consumption will change when income changes. Similarly, marginal propensity to save (MPS) reveals the relationship between the income change and the saving change and is calculated as the ratio of the saving change to the income change:

The factors that affect consumption expenditures are; Disposable Income, Wealth, Expectations ve Demographic Factors.

Autonomous investments refer to the level of investment expenditures which is
determined independently from income.

A firm’s inadequate stock operation can lead to a reduction in sales and loss of revenue. For this reason, the investment made by this firm is a planned inventory investment - that is, a stock change. Planned inventory investment is the planned change in stocks.

There are a number of factors that affect the expected profitability of investments. These include, for example, entry of new firms into the market, political instability in the country, newly enacted laws, taxes or tax advantages provided by the government and general economic conditions in
the world.