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19 Cards in this Set
- Front
- Back
aggregate demand curve
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The relationship between the quantity of aggregate output demanded and the price level.
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aggregate supply curve
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The relationship between the quantity of aggregate output demanded and the price level
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"animal spirits"
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Waves of optimism and pessimism that affect business and consumer spending
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consumer expenditure
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Total demand for consumer goods and services
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demand shocks
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The term used to describe the six factors that shift aggregate demand
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equation of exchange
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The equation M x V = P x Y, which relates nominal income to the money supply
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government spending
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Spending by all levels of government on goods and services
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hysteresis
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The theory that departures from full employment levels result from past high unemployment
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Keynesians
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Followers of Keynes who see the need for active government policy to restore the economy to full employment
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monetarists
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Followers of Milton Friedman who advocate the use of a rule whereby the monetary base grows at a constant rate
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natural rate of input
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The level of aggregate output produced at the natural rate of unemployment
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natural rate of unemployment
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The rate of unemployment consistent with full employment at which the demand for labor equals the supply of labor
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net exports
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Net foreign spending on domestic goods and services, equal to exports minus imports
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planned investment spending
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Total planned spending by business firms on new machines, factories, and other inputs to production plus planned spending on new homes
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quantity theory of money
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The theory that nominal income is determined solely by changes in the quantity of money
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real business cycle theory
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A theory that views real shocks to tastes and technology as the major driving force behind short-run fluctuations in the business cycle
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self-correcting mechanism
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A characteristic of the economy that causes output to return to the natural rate level of output regardless of where output is initially
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supply shocks
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Changes in technology and the supply of raw materials
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velocity of money
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The average number of times per year that dollar is spend on final goods and services
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