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15 Cards in this Set
- Front
- Back
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1.What is aggregate demand?
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A schedule or curve that shows the total quantity of goods and services demanded (purchased) at different price levels |
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2.What is the real balances effect?
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the tendency for increases in the price level to lower the real value(or purchasing power) of financial assets with fixed money value and, as a result, to reduce total spending and real output, and conversely for decreases in the price level. |
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3.What is the interest rate effect?
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the tendency for increase in the price level to increase the demand for money, raise interest rate, and, as a result, reduce total spending and real output in the economy(and the reverse for price-level decreases) |
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4.What is the foreign purchases effect?
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The inverse relationship between the net export of an economy and its price level relative to foreign price levels. |
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5.Identify factors that influence consumer spending.
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P233 and figure 12.2
Consumer wealth Household borrowing Consumer expectations personal taxes |
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6.Identify factors that influence investment spending.
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P234
Real interest rates expected returns -expectations about futre business conditions -technology -degree of excess capacity -business taxes |
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7.What impact does government spending have upon aggregate demand?
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P234
increase in governemnt purchasiing will shift the aggregate demand curve to the right as long as tax collections and inerest rates don't change as a result. a reduction in spending will shift the curve to the left |
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8.Identify factors that influence net export spending.
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P234
National income abroad exchange rates |
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9.What is the aggregate supply curve?
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P235
a schedule or curve showing the total quanitity of goods and services supplied (produced) at different price levels. |
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10.What does the text differentiate between the difference between the “long run” and the “short run”?
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P241
quick review 12.2 |
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11.What is the shape of the long-run aggregate supply curve if the economy is at full-employment? What is the shape of the short-run aggregate supply curve?
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12.Identify the determinants of aggregate supply.
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P239 and fig 12.6
1 change in input prices a. domestic resource price b. Prices of import resorces 2 Change in productivity 3 Change in legal-institutinal environment a buiness taxes and subsidies b government regulations |
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13.What are the effects of major changes in the aggregate demand and the aggregate supply curves? (e.g., what happens each of them increases or decreases?)
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14.What is the “ratchet effect”?
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P245
consider this |
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15.THE LAST WORD: Has the Impact of Oil Prices Diminished
Read this article and be prepared to comment on its contents. |
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