Econ Ch 11

Front 1

AD-AS model

Back 1

Enables us to analyze changes in real GDP and the price level simultaneously

Front 2

Aggregate demand

Back 2

Schedule/curve that shows the amounts of real output that buyers collectively desire to purchase at each possible price level

Front 3

Real-balances effect

Back 3

Change in price level effecting purchasing power

Front 4

Interest-rate effect

Back 4

The tendency for increases in the price level to increase the demand for money, raise interest rates, as a result, reduce total spending and real output in the economy

Front 5

Foreign purchases effect

Back 5

Inverse relationship between the net exports of an economy and its price level relative to foreign price levels

Front 6

Determinants of aggregate demand

Back 6

One or more of those "other things" change, shiffting the entire AD curve

Front 7

Aggregate supply

Back 7

Schedule/curve showing the level of real domestic output that firms will produce at each price level

Front 8

Long-run aggregate supply curve

Back 8

Is vertical at the economy's potential/full-employment output

Front 9

Short-run aggregate supply curve

Back 9

Is upsloping (a rise in the price level increases real output and vice versa)

Front 10

Determinants of aggregate supply

Back 10

"Other things" that cause a shift of the AS curve

Front 11

Productivity

Back 11

Second major determinant of AS; measure of the relationship between a nation's level of real output and amount of resources used (total output ÷ total input)

Front 12

Equilibrium price level

Back 12

Price level at which AD and AS intersects

Front 13

Equilibrium real output

Back 13

Real output where AD and AS intersects

Front 14

Efficiency wages

Back 14

Wages that elicit maximum work effort and thus minimize labor cost per unit of output.

Front 15

Menu costs

Back 15

The cost to a firm resulting from changing its prices