ECON 201
ABBREVIATIONS
Prof. M. Naples
A
Ap
AD
AE
APL
AS
AVC
ATC
C
Ca
c
CCA
DD
DM
e
G
i
I
Ia
Ig
In
Ip
I(i)
IM
IMa
K
LF
Autonomous Aggregate Expenditures
Planned Autonomous Aggregate Expenditure
Aggregate Demand
Aggregate Expenditure (A + mpe Yd)
Average Product of Labor (labor productivity)
Aggregate Supply
Average Variable Cost
Average Total Cost
Consumer Expenditures
Autonomous Consumption (book uses Co)
cash-holding ratio
Capital Consumption Allowance (Depreciation)
Demand deposits
Demand for Money
Exchange Rate
Government Expenditures on goods and services
Interest Rate
Real Investment Expenditures
Actual Investment Expenditures
Gross Investment Expenditures
Net Investment Expenditures
Planned Investment Expenditures
Investment Function; I as function of i
Import Expenditures (book uses M)
Autonomous imports
Capital Stock
Labor Force
L
m
MPL
MB
MC
MD
MS
mpc
mpe
mpi
mps
MULT
N
NW
NX
P
.
P
Ph

q$
r
rr
S
Sa
SM
T
Ta
t
Leisure
money multiplier
Marginal Product of Labor
Monetary Base
Marginal Cost
Quantity of Money Demanded
Money supply
Marginal Propensity to Consume (book also uses b)
Marginal Propensity to Expend = mpc - mpi
Marginal Propensity to Import
Marginal Propensity to Save
Expenditure Multiplier
Employment
Net Worth
Net Export Expenditures
Price level
Inflation Rate (rate of change of price level)
Phillips Curve
Profit Rate
Quantity of Dollars Exchanging on Foreign-Currency Markets
total reserve ratio
Required Reserve Ratio
Saving (out of current income)
Autonomous Saving
Supply of Money
Macro Taxes
Autonomous Taxes
Income-tax rate
U
W
X
xr
Y
Yd
Unemployment Rate
Wage rate
Export Expenditures
Excess Reserve Ratio
National Income, National Output, GDP
Disposable Income, Take-Home Pay
ECON 201
Handout on Expenditure Models
Prof. M. Naples
Model with consumption as a function of income:
C = Ca + mpcYD
Since taxes=0, Y = YD,
C = Ca + mpcY,
AE = C + I + G + NX = A + mpcY
Mult = 1/(1-mpc) = 1/mps
Model with imports and consumption as a function of income:
IM = IMa + mpi(Y)
AE = [Ca + I + G + (X-IMa)] + (mpc-mpi)Y =
A + mpe(Y)
where mpe = mpc-mpi
MULT = 1/(1-mpe) = 1/(1-mpc+mpi)
= 1/(mps+mpi)
Model with lump-sum taxes; imports and consumption as a function of
income:
YD = Y-T
C = Ca + mpc(YD) = Ca - mpc(T) + mpc(Y)
AE = [Ca - mpcT + I + G + (X-IMa)] + (mpc-mpi)Y =
A + mpe(Y)
where mpe = mpc-mpi
MULT = same as before:
MULT = 1/(1-mpe) = 1/(1-mpc+mpi)
= 1/(mps+mpi)
Model with income taxes: (for reference only, recognize the
multiplier)
T = Ta + tY
YD = Y-T = Y(1-t) - Ta
C = Ca + mpc(YD) = Ca - mpc(Ta) + mpc[Y(1-t)]
AE = [Ca - mpcTa + I + G + (X-IMa)] + (mpc(1-t)-mpi)Y =
A + mpe(Y)
where mpe = mpc(1-t)-mpi
MULT = 1/(1-mpc(1-t)+mpi)
= 1/(mps+mpi+t(mpc))
so more built-in or induced leakages than lump-sum tax model