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8 Cards in this Set
- Front
- Back
Aggregate supply |
theamount of output that all firms in an economy are willing and able to supply at variousprice levels during a period of time |
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Short run aggregate supply curve |
a curve showing how much output firms would be prepared to supply in the short run at any given overall price level |
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Keynesian school |
a group of economists who believed that the macroeconomy could settle at an equilibrium that was below full employment and that government intervention (using fiscal stimulus) may be necessary to return the economy to full employment before "we are all dead". |
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Keynesian long run aggregate supply curve |
A long run AS curve with elastic, upward sloping and vertical sections which allows for long run macroeconomic equilibrium below the full employment (full capacity) level of output/national income. |
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Monetarist school |
a group of economists who believed that the macroeconomy always adjusts rapidly to the full employment level of output and that monetary policy should be the prime instrument for stabilizing the economy |
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Neoclassical (monetarist) long run aggregate supply curve |
A vertical long run aggregate supply curve which assumes that long run macroeconomic equilbrium will ALWAYS occur at the full employment (full capacity) level of output/national income. |
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Natural rate of output |
the long run equilibrium level of output to which monetarists believe the macroeconomy will always tend. |
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Natural rate of unemployment |
the unemployment rate that will exist when the economy is in long run equilibrium. Note: this is believed to be > zero. |