Question

Wealth effect. - Multiplier effect. - Crowding out effect. - Autonomous consumption. - Laffer curve. - Automatic stabilizer. - Permanent income. - Closed economy. - Capital deepening. - Rule of 70. A. Explanation of the slope of AD curve. B. Years to double output. C. 1/MPS. D. Long run average level of income. E. Transfer payments. F. Fall in investment due to increase in G. G. Economy without foreign sector. H. Spending without income. I. Increase capital per worker. J. Lower tax rates lead to higher tax revenues.

Answer 1

Answer and Explanation:

The matching is as follows:

Wealth effect = This would give the AD curve slope explanation

Multiplier effect = 1 ÷ MPS

Crowding out effect = Decline in investment because of rise in G.

Autonoumous consumption= Spending without considering income.

Laffer curve = Lesser tax rates that lead to higher tax revenues.

Automatic stabilizer = Transfer payments.

Permanent income= Long run average income level

Closed economy= Economy without considering foreign sector.

Capital deepening = rise in capital per worker.

Rule of 70 = Number of Years to double output.