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16 Cards in this Set
- Front
- Back
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Movements along the LAS and SAS curves
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Price level, money wage rate, other resource prices rise by the same %, relative price remains constant and real GDP remains at potential GDP--along the LAS curve
Price level rises but others remain the same---along SAS curve |
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Changes in Aggregate Supply
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when influences on production plans other than the price level change
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Changes in Potential GDP
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Full-employment Q of labour
Q of capital An advance in technology |
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Changes in the money wage rate and other resource prices
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SAS changes but LAS does not
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2 reasons why Aggregate demand slopes downward
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The wealth effect
The substitution effect |
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Movements along the AD curve
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when price level changes
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Changes in AD
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Expectations
Fiscal policy and monetary policy the world economy |
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Macroeconomic Equilibrium
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SR
LR |
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SRME
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occurs when the quantity of real GDP demanded = the Q of real GDP supplied
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LRME
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occurs when real GDP= potential GDP
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Economic growth
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occurs because over time
the Q of labor grows Capital is accumulated Technology advances |
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Inflation
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occurs when over time AD increases by more than LRAS increases
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Below full employment equilibrium
above full employment equilibrium |
recessionary gap
inflationary gap |
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Fluctuations in AD
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Short run effect
Long run effect |
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Fluctuation in AS
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stagflation
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Canadian Economic Growth, Inflation, and Cycles
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.....
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