Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
13 Cards in this Set
- Front
- Back
|
Okun's Law
|
The law that states there is a negative relationship between unemployment and GDP.
Employed workers produce goods and services and unemployed workers do not, so increases in the unemployment rate decrease real GDP. |
|
|
Leading Indicators
|
Variables that tend to fluctuate in advance of the overall economy. There are 10 of them
|
|
|
Aggregate Demand
|
The relationship between the quantity of output demanded and the aggregate price level. It's essentially the quantity of goods and services people want to buy at any given price point.
|
|
|
Aggregate Supply
|
The relationship between the quantity of goods and services supplied and the price level.
|
|
|
Shocks
|
Exogenous events that shift the aggregate demand or aggregate supply curve.
|
|
|
Demand Shocks
|
Exogenous event that shifts the demand curve.
|
|
|
Supply Shocks
|
Exogenous event that shifts the supply curve.
|
|
|
Stabilization Policy
|
Policy actions aimed at reducing the severity of short-run economic fluctuations.
|
|
|
When the real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate?
|
The following things happen:
1. Consumption decreases. 2. Investment decreases. 3. Unemployment rate increases. |
|
|
What is an example of a price that is sticky in the short run but flexible in the long run?
|
Restaurant Prices
|
|
|
Why does the aggregate demand curve slope downwards?
|
The curve slopes downwards because people demand more as the price level decreases.
|
|
|
Explain the impact of an increase in the money supply in the short run and in the long run.
|
IDK!
|
|
|
Why is it easier for the Fed to deal with demand shocks than with supply shocks?
|
The demand curve is linked to the money supply. The Fed directly controls the money supply. Thus, the Fed can more easily handle shocks to aggregate demand through monetary policy than it can to the supply shocks, which requires fiscal policy.
|
