Term
| Aggregate Supply Curve (AS) |
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Definition
| the curve that shows the level of Real GDP produced at different possible price levels during a time period. |
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Term
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Definition
| horizontal segment of the aggregate supply curve, which represents an economy in a severe recession |
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Definition
| rising segment of the aggregate supply curve, which represents an economy as it reaches full employment output |
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Definition
| vertical segment of the aggregate supply curve, which represents an economy at full employment output |
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Term
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Definition
| condition that occurs when an economy experiences the twin maladies of high unemployment and rapid inflation simultaneously |
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Term
| John Maynard Keynes' Book |
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Definition
General Theory of Employment, Investment, and Money Written in 1936 |
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Term
| What does "supply creates its own demand" mean and what is it called? |
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Definition
It means that if the products are made there will be a demand for them It is called says law |
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Term
| 5 Factors of Shift in Aggregate supply |
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Definition
1. Resource Prices 2. Taxes 3. Technology 4. Subsidies 5. Regulation |
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Term
| 4 Causes of shift in aggregate demand |
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Definition
1. Consumption (C) 2. Investment (I) 3. Government Spending (G) 4. Net Exports (X-M) |
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Term
| Why is the long run aggregate supply curve (LRAS) vertical? |
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Definition
| result of nominal wages/salary eventually changing by the same percentage as the price level changes |
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Term
| Short Run Aggregate Supply Curve (SRAS) |
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Definition
| curve that shows the level of real GDP produced at different possible price levels during a time period in which nominal incomes do not change in response to changes in price level |
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Term
| 2 Reasons wages are fixed in the short run |
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Definition
1. Incomplete Knowledge - workers unaware of inflation in the short run 2. Fixed Wage Contracts |
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Term
| Long Run Aggregate Supply Curve (LRAS) |
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Definition
| curve that shows the level of real GDP produced at differerent possible price levels during a time period in which nominal incomes change by the same percentage as the price level changes |
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Term
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Definition
| curve that shows the level of real gross domestic product purchased by households, business', govt., and foreigners (net exports), at different possible price levels during a time period |
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Term
| Real Balances (wealth effect) |
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Definition
| impact on total spending caused by the inverse relationship between the price level and the real value of financial assets with fixed nominal value |
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Term
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Definition
| impact on total spending caused by the direct relationship between the price level and interest rate |
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Term
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Definition
| impact on total spending caused by the inverse relationship between the price level and the net exports of an economy |
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