Term
| increase in savings rate, s, causes long-run output, consumption and capital per worker to |
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Definition
| rise because higher saving allows for more investment and a larger capital stock |
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Term
| increase in population growth rate, n, causes long-run output, consumption and capital per worker to |
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Definition
| fall because with higher population growth more output must be used to equip new workers with capital, leaving less output available for consumption or to increase capital per worker |
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Term
| increase in productivity, a, causes long-run output, consumption and capital per worker to |
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Definition
| rise because higher productivity directly increases output, by raising incomes, it also raises saving and the capital stock |
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Term
| an increase in price level, p, causes money demand to |
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Definition
| rise because the higher the price level the more number of dollars needed for transactions |
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Term
| an increase in real income, Y, causes money demand to |
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Definition
| rise because higher real income implies more transactions an thus a greater demand for liquidity |
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Term
| an increase in real interest rate, r, causes money demand to |
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Definition
| fall because higher real interest rate means a higher return on alternative assets and thus a switch away from money |
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Term
| an increase in expected inflation, pie to the power of 3, causes money demand to |
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Definition
| fall because higher expected inflation means a higher return on alternative assets and thus a switch away from money |
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Term
| an increase in nominal interest rate of money, i to the power of m, causes money demand to |
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Definition
| rise because higher return on money makes people more willing to hold money |
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Term
| an increase in wealth, w, causes money demand to |
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Definition
| rise because part of an increase in wealth may be held in the form of money |
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Term
| an increase in risk causes money demand to |
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Definition
| rise because the alternative asset has a high risk making money seem more attractive |
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Term
| an increase in liquidity of alternative assets causes money demand to |
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Definition
| fall because higher liquidity of alternative assets makes these assets more attractive |
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Term
| an increase in payment technology causes money demand to |
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Definition
| fall because people can operate with less money |
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Term
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Definition
| variable that moves in the same direction as aggregate economic activity |
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Term
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Definition
| a variable that moves in opposite direction to aggregate economic activity |
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Term
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Definition
| variables that do not display a clear pattern over the business cycle |
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Term
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Definition
| a variable whose peaks and troughs occur before the corresponding business cycle peaks and troughs |
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Term
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Definition
| a variable whose peaks and troughs occur at about the same time as the corresponding business cycle peaks and troughs |
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Term
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Definition
| one whose peaks and troughs tend to occur later than the corresponding peaks and troughs in the business cycle |
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Term
| a beneficial supply shock shifts the FE line... |
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Definition
| right because more output can be produced for the same amount of capital and labor |
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Term
| a increase in labor supply shifts the FE line... |
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Definition
| right because equilibrium employment rises, raising FE output |
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Term
| a increase in the capital stock shifts the FE line... |
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Definition
| right because more output can be produced with the same amount of labor |
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Term
| an increase in expected future output shifts the IS curve... |
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Definition
| up and right because S NAT falls raising the real interest rate that clears the goods market |
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Term
| an increase in wealth shifts the IS curve... |
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Definition
| up and to the right because S NAT falls raising the real interest rate that clears the goods market |
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Term
| an increase in government purchases, G, shifts the IS curve... |
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Definition
| up and to the right because S NAT falls raising the real interest rate that clears the goods market |
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Term
| an increase in taxes, T, shifts the IS curve... |
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Definition
| no change if consumers take in RE or down and to the left because they would increase S NAT and reduce C which would lower the real interest rate that clears the goods market |
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Term
| an increase in expected future marginal product of capital, MPK to the power of f, shifts the IS curve... |
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Definition
| up and to the right because I d increases, raising the real interest rate that clears the goods market |
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Term
| an increase in effective tax rate on capital shifts the IS curve... |
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Definition
| down and to the left because I d falls, lowering the real interest rate that clears the goods market |
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Term
| an increase in nominal money supply, M, shifts the LM curve... |
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Definition
| down and to the right because real money supply increses, lowering the real interest rate that clears the asset market |
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Term
| an increase in price level, P, shifts the LM curve... |
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Definition
| up and to the left because real money supply falls, raising the real interest rate that clears the asset market |
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Term
| an increase in expected inflation, pie to the power of e, shifts the LM curve... |
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Definition
| down and to the right because demand for money falls, lowering the real interest rate that clears the asset market |
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Term
| an increase in nominal interest rate of money, i to the power of m, shifts the LM curve... |
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Definition
| up and to the left because demand for money increases, raising the real interest rate that clears the asset market |
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Term
| a shock that shifts the IS curve to the right will shift the AD curve.. |
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Definition
| right because equilibrium in the goods and money markets requires a higher level of output, given that price level |
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Term
| a shock that shifts the LM curve to the right will shift the AD curve.. |
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Definition
| right because equilibrium in the goods and money markets requires a higher level of output, given that price level |
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Term
| SRAS will shift up or down when.. |
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Definition
| firms in the aggregate change the prices they charge, increase of prices shifts SRAS up |
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Term
| LRAS will shift left or right when.. |
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Definition
| full employment output changes, LRAS will shift left when FE shifts left |
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Term
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Definition
| M1 + saving deposits + MMMF or MMDA |
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