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Ch. 13-AD/AS

AD/AS Fiscal Policy

Another name for national economics is _____________. Macroeconomics
The total market value of all final goods and services produced annually in an economy is called __________ , or GDP.A good that has not yet reached its final user is called an _______________ , and is not counted in GDP. Gross Domestic product (GDP); intermediate good
The services of a worker who is always paid in cash, the services of unpaid household workers, and the purchase of a used car is(are / are not) ____________ counted in the GDP. are not counted
When C stands for ____________ , I for _________________ , G for ____________ expenditures, X for net ___________ , then the following equation shows how to calculate GDP: GDP = C + I + G + X. consumption; investment, government; net exports
Of the four categories of spending, _____________________ accounts for the largest amount. consumption
The two ways of calculating GDP are the ___________________ approach and the _____________ approach. income; expenditure
__________ personal income is your personal income after subtracting out taxes paid. Disposable
_________ payments are welfare, social security, and other supplementary payments that state or the federal govt. makes to individuals Transfer
T or F: Regardless of which way you calculate GDP, you should get the same result. True
What do economists call a general rise in prices? ____________________ a general decline in prices? _______________________ inflation; deflation
The ability to buy goods and services with money is called _______________ purchasing power
GDP adjusted for price changes, or inflation, is called ____________ Real GDP
If real GDP goes up in an economy, then what can we conclude? the total number of goods and services has gone up
What is the CPI and what does it measure? consumer price index and it measures the rise and fall of prices for consumer goods and services
What is the PPI and what does it measure? producer price index and it measures the rise and fall of the prices of resources (land, labor, and capital)
What is per capita GDP and why is it useful? GDP divided by population and allows economists to compare countries of different sizes
___________ represents the total spending in the economy at alternate price levels and the slope of this curve is _________________. Aggregate demand (AD); negative
____________ represents the total output of the economy at alternate price levels and the slope of this curve is ________________. Aggregate supply (AS);positive
__________ inflation is caused by increasing demand for output while ________________ inflation is caused by rising costs of production. Demand-pull; cost-push
If aggregate demand falls , the equilibrium level of income (real GDP) _________ and unemployment ___________ . falls; rises
An increase in aggregate supply leads to a(n) ________________ in the equilibrium level of national income and _____________ prices. increase; lower
Aggregate demand (AD) consists of _________________ plus _______________ plus _____________________________ plus _______________________ , or C+I+G+X. consumption + investment+ government spending+ exports- imports (net exports)
If income, wealth, and/ or population growth increases, then consumption __________. increases
Higher taxes lower disposable income and __________________ consumption. decreases
If interest rates fall then investment (the amount that businesses spend on capital goods) will ____________. increase
When domestic income or domestic prices rise, net exports ______________ . decrease
When the price level falls, the value of household and business assets (increases / decreases) ________ . Households and firms spend (more / less) __________ , and aggregate expenditures (rise / fall) ___________ . This is called the ___________ effect. increases; more;rise;wealth
When prices increase, people and businesses need ______ money. They _______ bonds, causing interest rates to __________ and investment and aggregate expenditures to ___________. This is called the ________ effect. more; sell; rise ;fall; interest rate effect
When the price level falls, domestic goods become _______________ for foreigners. Net exports____________ , and aggregate expenditures__________. This is called the __________ effect. cheaper; increase; increase; international trade
Positive expectations about the economy, higher foreign incomes, and/ or increased government spending will cause a shift in aggregate demand to the _____________. right
The __________ -run is the period of time when costs are variable and the ______ -run the period of time is when all production costs remain constant. long run; short run
When the price of resources fall, the short-run aggregate supply curve shifts to the ______________. right
New technology can cause the short-run AS curve to shift to the ____________ as more output can be produced at a lower cost. right
The equilibrium level of income is where ___________________ equals __________________________ or where the AD and AS curves intersect. aggregate demand (total spending); aggregate supply (total output)
The _________-run aggregate supply curve is a vertical line at the potential level of national income. long run
The recurring pattern of real GDP rising and falling is called a(n) _________________ ____________. business cycle
The four phases of the business cycle in order are ______________ , ____________________, ____________________, and ___________________. peak; contraction; trough; expansion
A(n) ___________________________ is a prolonged period of severe economic contraction while a _____________________ occurs when real GDP has decreased for at least 2 quarters, or 6 months. depression; recession
____ indicators change before real GDP changes, ____ indicators are economic variables that tend to change at the same time real output changes, and variables that do not change their value until after the value of real GDP has changed are called ___ ind leading; coincident; lagging
A worker changing jobs is considered ______________________ unemployed. frictionally
Increasing use of computers or robots may cause _____________________ unemployment. structural
The labor force does not include: military personnel, prisoners, and those in mental institutions
The labor force includes those ___ yr. of age or older who are _____________ for work or who are currently ___________ 16; looking; working
A person who loses her job at the mill because the market for wood has hit a recession is considered _________________ unemployed. cyclically
A strawberry picker who is out of work because the season is over is considered _________________ unemployed. seasonally
A civil engineer working as a math tutor would be considered _______. underemployed
Full employment, or the natural rate of unemployment means there is ____________________ unemployment. no cyclical



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