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12 Cards in this Set

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