In the Quantity Equation, the Value $P _ { t } Y _ { t }$

question 55

Multiple Choice

In the quantity equation, the value $P _ { t } Y _ { t }$ is:

• A) real GDP
• B) nominal GDP
• C) aggregate expenditure
• D) the velocity of money
• E) real money

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Definitions:

Disposable Income

The funds that are available to households for saving and spending activities after the deduction of income taxes.

Induced Consumption

The portion of consumer spending that increases with an increase in disposable income, implying that as people earn more, they tend to spend more.

APC

In economics, it stands for Average Propensity to Consume, indicating the fraction of income that is spent.

Disposable Income

Resources households have at their disposal for saving and expenditure once income taxes have been accounted for.