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7 Cards in this Set
- Front
- Back
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What is held constant on the Aggregate Demand Curve? |
Nominal wealth, Consumer sentiments/expectations, Business sentiments/expectations, Foreign Price levels, Foreign Interest rates, Foreign Income and GDP, Government spending, taxes, and Monetary Policy |
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What is held constant on the Short-Run Aggregate Supply Curve? |
Wages & input prices, Price expectations, anything that establishes Yn/LRAS: Technology, Resource prices, Quantity of labor, Quantity of natural resources, Quantity of capital |
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What are the 3 theories to explain the upward slope of the Short Run Aggregate Supply Curve? |
Sticky Wage Theory, Sticky Price Theory, Misperceptions Theory |
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What factors affect the Net Capital Outflow (NCO)? |
Real interest paid on foreign assets, Real interest paid on domestic assets, perceived risk of holding foreign assets, government policy affecting foreign ownership of domestic assets |
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What is stagflation? |
A period of high rate of inflation, slow rate of economic growth, and high unemployment. |
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What is natural unemployment and how is it defined mathematically? |
Natural unemployment is the level of unemployment around which the economy fluctuates. When actual unemployment = natural unemployment, inflation is stable. Natural Unemployment = (Structural + Frictional + Cyclical Unemployment) |
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How do fiscal and monetary policy fight recessions? |
Fiscal policy can fight recession by increasing government spending or lowering taxes, which decrease interest rates and move the demand curve right. Monetary policy can increase the supply of money, which decreases interest rates and move the demand curve right. |
