Term
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Definition
| the macro model that uses AD and AS to determine and explain PL and real domestic output |
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Definition
| a schedule or curve thaat shows the total quantity of G&S demanded at different PL's |
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Definition
| the tendency for increases in the PL to lower the real value of financial assets with fixed money value to reduce total spending and real output, and conversely for decreases in the PL |
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Definition
| the tendency for increases in the PL to increase the demand for money, raise interest rates and reduce total spending and real output in the economy |
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Definition
| the inverse relationship between the net exports of an economy and its PL relative to foreign PL's |
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Term
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Definition
| factors such as consumption spending, investment, government spending and net exports that can shift the AD curve |
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Term
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Definition
| a schedule or curve showing the total quantity of G&S supplied at different PL's |
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Term
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Definition
| the AS curve associated with a time period in which input prices are fully responsive to changes in the PL |
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Definition
| an AS curve relevant to a time period in which input prices dont change in response to a change in PL |
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Definition
| factors such as input prices, productivity, and the legal-institutional environment that could shift the AD curve |
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Term
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Definition
| a measure of avg output or real output per unit of input |
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Definition
| the PL at which the AD curve meets the AS curve |
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Term
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Definition
| the real domestic output at which the AD curve intersects the AS curve |
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Term
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Definition
| a wage that minimizes wage costs per unit of output by encouraging greater effort or reducing turnover |
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Term
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Definition
| the cost to replace a restaurants menus |
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Term
| an increase in the PL will cause a ____ |
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Definition
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Term
| What does C Ig G Xn stand for? |
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Definition
| consumption, gross investment, government spending, net exports |
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Term
| CIG-x is used as ___ shifters |
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Definition
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Term
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Definition
| resource cost, actions of G (subsidies, business taxes, and business regs) and productivity |
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Term
| RAP is used as ___ shifters |
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Definition
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Term
| Potential output does not mean _____ unemployment |
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Definition
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Term
| Without inflation, what rates would be the same? |
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Definition
| nominal and real interest |
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Term
| What are 3 reasons for a downsloping AD curve? |
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Definition
Interest rate effect (more Ig)
Real-balances effect (more C)
Foreign Purchases effect (foreigners buy more) |
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Term
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Definition
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Term
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Definition
| a point on the curve based on a particular PL |
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Term
| What can shift the AD to the right? |
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Definition
| consumer wealth increases, consumer expectations about future prices increases, consumer expectations about future income are positive |
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Term
| What can shift AD to right 2? |
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Definition
| consumer indebtedness is low, personal taxes decrease, and real interest rates decrease |
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Term
| What can shift AD to right (change in investment spending)? |
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Definition
| real interest rates decreases, positive profit returns, business taxes decrease, depleted inventory stockpiles in supply chain |
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Term
| What are reasons for upsloping AS curve? |
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Definition
| increasing opportunity cost if firms dont produce, current producers produce more, new producers in market |
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Term
| the AD curve shows amount of ___ domestic output which will be purchased at each possible |
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Definition
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Term
| the AD curve is always ___ sloping & shows ____ relationship b/t output and ____ |
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Definition
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Term
| the income and sub effects ___ apply to AD curve |
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Definition
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Term
| What will shift AS curve right (resource cost decrease)? |
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Definition
| land (new raw materials are found), labor (labor force increases), capital stock or entreprenural ability increases, the number of sellers of resources increases |
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Term
| What will shift the AS curve right (resource cost decrease overseas)? |
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Definition
| imported resources decrease in price, dollar appreciates, OPEC nations cheat by producing more oil |
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Term
| What will shift AS curve right (gov actions)? |
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Definition
| business taxes decrease, subsidies are increased, gov't regulations are decreased |
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Term
| What will shift the AS curve right (productivity increases)? |
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Definition
| tech breakthroughs leads to increase in productivity |
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Term
| What does the ratchet effect do to AD? |
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Definition
| When AD decreases, product prices, wage rates and per-unit production costs are inflexible downward |
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Term
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Definition
| the amount by which aggregate expenditures at the full-employment GDP fall short of those required to achieve the full-emplotmeny GDP |
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Term
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Definition
| amount by which an economys aggregate expenditures at the full-emploment GDP exceed those just necessary to achieve full-employment GDP |
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Term
| C or K? Supply creates demand. |
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Definition
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Term
| C or K? Savings = investment. |
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Definition
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Term
| C or K? Savings increase with the interest rate. |
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Definition
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Term
| C or K? Prices and wages are flexible downward. |
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Definition
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Term
| C or K? AS=AD at full-employment equilibrium. |
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Definition
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Term
| C or K? The economy is always close to/at F.E. |
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Definition
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Term
| C or K? The gov't does not have an economic management role to play. |
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Definition
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Term
| C or K? Demand creates supply. |
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Definition
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Term
| C or K? Savers & investors save and invest for different reasons. |
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Definition
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Term
| C or K? Savings are inverse to interest rate. |
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Definition
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Term
| C or K? Prices/wages are inflexible downward. |
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Definition
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Term
| C or K? There is no mechanism capable of guaranteeing full employment. |
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Definition
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Term
| C or K? Economy is not always close to/at F.E. |
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Definition
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Term
| C or K? There is a definite management role for government. |
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Definition
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