macroeconomics ch 8 Aggregate Demand & Aggregate Supply
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Help!
|
|
||||
|---|---|---|---|---|---|
| aggregate demand (AD) | the qty of all goods & services (Real GDP) at different price levels, ceteris paribus; represents spenders
🗑
|
||||
| aggregate demand (AD) curve | downward slope b/c 1. real balance effect (wealth), 2. interest rate effect, 3. int'l (foreign) trade effect; inverse relationship between the Price level & the qty demanded of Real GDP
🗑
|
||||
| AD curve equation | AD = C+I+G+Nx; left side of = sign, house to house movement, right side of = sign, street to street movement; direct relationship, one side of = sign goes up, so does the other & vice versa
🗑
|
||||
| real balance effect | the change in the purchasing power of dollar-denominated assets that results fr a change in the price level; basically when your money means more, you buy more; house to house movement
🗑
|
||||
| interest rate effect | the changes in household & business spending that is sensitive to changes in the interest rate; inverse relationship, house to house movement
🗑
|
||||
| international trade effect | the changes in foreign sector spending as the PL changes; PL down, PP$ up Qty up (buy more) US goods & PL up, PP$ down Qty down (buy less) US goods; house to house movement
🗑
|
||||
| monetary wealth | the value of a person's monetary assets only
🗑
|
||||
| wealth | the value of all assets owned, both monetary & nonmonetary
🗑
|
||||
| exchange rate | the price of one currency in terms of another currency
🗑
|
||||
| appreciation | an increase in the value of one currency relative to other currencies; PP$ up ->US Ex up US Im down -> Nx up -> AD up
🗑
|
||||
| depreciation | a decrease in the value of one currency relative to other currencies; PP$ down -> US Ex down US Im up -> Nx down -> AD down
🗑
|
||||
| velocity | the average # of times a dollar is spent to buy final goods & services in a yr
🗑
|
||||
| aggregate supply | the qty supplied of all goods & services (Real GDP) at different price levels, ceteris paribus
🗑
|
||||
| Short-Run Aggregate Supply (SRAS) Curve | a curve that shows the qty supplied of all goods & services (Real GDP) at different price levels, ceteris paribus; represents producers, upward sloping b/c sticky wages & worker misperceptions (house to house)
🗑
|
||||
| SRAS shifters (street to street) | wage rates (inverse), prices of nonlabor inputs (inverse), productivity (direct), supply shocks (beneficial SRAS up, adverse SRAS down)
🗑
|
||||
| short-run equilibrium | the cond in the economy when the qty demanded of Real GDP = the (short-run) qty supplied of real GDP; where the AD curve and SRAS curve intersect
🗑
|
||||
| natural real GDP | the real GDP that is produced at the natural unemployment rate; the real GDP that is produced when the economy is in long-run equilibrium; Qn
🗑
|
||||
| long-run aggregate supply (LRAS) curve | a vert line at the level of natural real GDP; represents the output the economy produces when wages & prices have adjusted to their equilibrium levels when wkrs do not have any relevant misperceptions; the economy's potential
🗑
|
||||
| long-run equilibrium | the condition that exists in the economy when wages & prices have adjusted to their (final) equilibrium level when wkrs don't have any relevant misperceptions; graphically LR equilibrium occurs at the intersection of the AD & LRAS curves
🗑
|
||||
| LRAS GDP names | 1. potential GDP, 2. Natural GDP, 3. Natural Unemployment GDP (Fric + Struc = Nat Unemp), 4. full employment GDP, 5. Maximum Sustainable GDP
🗑
|
||||
| LRAS Curve movements | economy is too hot = left of SR equilibrium, Inflationary Gap = too much spending; economy is too cold = right of SR equilibrium, Recessionary/Contractionary Gap; economy is just right at LR equilibrium when at SR equilibrium
🗑
|
||||
| credit market/loanable funds | where you would use the interest rate effect - PL down, PP$ up = more borrowers <aggregate qty demanded increased>, int rate down & PL up, PP$ down = less borrowers <aggregate qty demanded decreased>, int rate up; s = savers, D = borrowers, int rate y-ax
🗑
|
||||
| difference between SR & LR | SR = adj/changes cannot be made, LR they can
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
katt61
Popular Economics sets