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12 Cards in this Set
- Front
- Back
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Aggregate demand curve (AD)
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The curve that shows the level of real GDP purchased by households, businesses, government, and foreigners (net exports) at different possible price levels during a time period, ceteris paribus
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Real balances (or) wealth effect
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The impact of total spending (real GDP) cuased by the inverse relationship between the price level and the real value of financial assets with fixed nominal value.
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Interest-rate effect
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The impact on total spending (real GDP) caused by the direct relationship between the price level and the interest rate
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Net exports effect
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The impact on total spending (real GDP) cuased by the inverse relationthip between the price level and the net exports of an economy
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Aggregate supply curve (AS)
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The curve that shows the level of real GDP produced at different possible price levels during a time period, ceteris paribus
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Keynesian range
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The horizontal segment of the aggregate supply curve, which represents an economy in a severe recession.
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Intermediate range
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The rising segment of the aggregate supply curve, which represents an economy as it approahces full-employment output
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Classical range
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The vertical segment of the aggregate supply curve, which represents an economy at full-employment output
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Long-run aggregate supply curve (LRAS)
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The curve that shows the level of real GDP produced at different 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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stagflation
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The condition that occurs when an economy experiences the twin maladies of high unemployment and rapid inflation simultaneously
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Shor-run aggregate supply curve (SRAS)
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The 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 the price level
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Long-run aggregate supply curve (LRAS)
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The curve that shows the level of real GDP produced at different possible price levels during a time period in which nominal incomes change by the same pervcentage as the price level changes
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