a.

)Average propensity to concume The average propensity to consume (APC) measures the percentage
of income that is spent rather than saved. This may be calculated by a single individual who wants to
know where the money is going or by an economist who wants to track the spending and saving habits
of an entire nation. b).GNP deflator GNP deflator is a true measurement of economic growth In
economics, the GDP deflator is a measure of the level of prices of all new, domestically produced, final
goods and services in an economy in a year. GNP deflator = Nominal GNP÷Real GNP c).Disposable
income The total personal income currently deducted from income tax is called disposable income.In
national accounts definations, personal income minus personal current taxes equals disposable personal
income. d).Psycological low of consumption The Keynesian concept of consumption function stems from
the fundamental psychological law of consumption which states that there is a common tendency for
people to spend more on consumption when income increases, but not to the same extent as the rise in
income because a part of the income is also saved.