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18 Cards in this Set
- Front
- Back
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The long run aggregate supply curve shifts left if
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Congress raises the minimum wage substantially
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An increase in the expected price level
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does not affect the short-run aggregate supply curve but shifts the long-run aggregate supply curve to the right.
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Human capital is
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the knowledge and skills that workers acquire through education, training, and experience.
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The aggregate demand curve slopes
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downward because higher prices cause real wealth to increase and interest rates to fall.
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Keynesian economics
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believes that unemployment results when aggregate demand is insufficient to reach a full employment level of real GDP.
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If the long-run equilibrium of an economy is disrupted by an unanticipated increase in aggregate demand (such as might result from unexpectedly strong demand for exports due to the rapid growth of incomes abroad),
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actual unemployment will temporarily fall below the natural rate.
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All else equal, if fiscal policy is expansionary which of the following is the correct monetary policy to follow?
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Reduce the growth of the money supply
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The circular flow diagram is best described as a(n)
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model that clarifies the relationship between spending and income.
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If you were a Keynesian, you would
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focus on increasing aggregate demand in order to stimulate the economy
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Colombia produces coffee with less labor and land than any other country; it has
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an absolute advantage in coffee production
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The production possibilities frontier is bowed outward as a result of
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increasing costs.
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A decrease in the price level induces people to hold
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less money, so they lend more and the interest rate falls
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If interest rates increase, what will happen to the demand for money?
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Nothing; the economy will move to a new quantity demanded.
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A decrease in U.S. interest rates leads to
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a depreciation of the dollar, which leads to greater net exports.
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The long-run aggregate supply curve would shift left if
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immigration from abroad decreases.
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The demand for money will
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decrease as prices decrease
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Expansionary monetary policy will
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often reduce real interest rates in the short run.
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Which of the following will most likely occur in the short run if long-run equilibrium is disturbed by an unanticipated decrease in aggregate demand?
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A decrease in output and a lower price level.
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