National income and aggregate activity
| English | 中文 | Pinyin |
|---|---|---|
| real GDP/rɪəl ˌdʒiː diː ˈpiː/ | 实际国内生产总值 | shí jì guó nèi shēng chǎn zǒng zhí |
| multiplier/ˌmʌltɪˈplaɪə/ | 乘数 | chéng shù |
A decision you can investigate
- A country reports higher GDP, but its population and prices also grew.
- The headline increase alone does not show higher average real living standards.
Build the explanation
- Aggregate demand is C + I + G + (X − M). Aggregate supply links the price level to total output.
- Real GDP 实际国内生产总值 removes price changes; per-capita GDP divides by population, but does not show distribution or unpaid work.
Match the terms to their precise meanings.
Use these definitions in the particular context of National income and aggregate activity.
Work through the evidence
- In a simple closed model with no tax or imports, MPC = 0.8 gives multiplier 乘数 k = 1/(1 − 0.8) = 5.
- An autonomous injection of 10 gives a modelled income rise of 50; taxes and imports add leakages in a fuller model.
What happens to the simple multiplier when the marginal propensity to save rises?
In a simple closed model with no tax or imports, MPC = 0.8 gives multiplier k = 1/(1 − 0.8) = 5. An autonomous injection of 10 gives a modelled income rise of 50; taxes and imports add leakages in a fuller model.
Test the limits
- State the model assumptions before using 5 as a prediction.
- An AD increase can raise real output or mainly raise prices, depending on spare capacity and supply conditions.
Which caution belongs to this particular task?
State the model assumptions before using 5 as a prediction. An AD increase can raise real output or mainly raise prices, depending on spare capacity and supply conditions.
The explanation in this lesson makes a conditional claim; relevant context and evidence still matter.
An AD increase can raise real output or mainly raise prices, depending on spare capacity and supply conditions.
Apply and explain your answer
- What happens to the simple multiplier when the marginal propensity to save rises?
- It falls because more of each extra unit of income leaks from spending.
Choose the two statements supported by this lesson.
The concept and worked evidence support these claims; the stated limits rule out the universal shortcut.
Use the terms precisely
- multiplier: The ratio of the total income change to an initial autonomous spending change.
- real GDP: Output measured after removing price changes.
In a simple closed model with no tax or imports, MPC = 0.8 gives multiplier k = 1/(1 − 0.8) = 5. An autonomous injection of 10 gives a modelled income rise of 50; taxes and imports add leakages in a fuller model.
State the model assumptions before using 5 as a prediction. An AD increase can raise real output or mainly raise prices, depending on spare capacity and supply conditions.
Aggregate demand is C + I + G + (X − M). Aggregate supply links the price level to total output.