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;
21 Cards in this Set
- Front
- Back
|
Aggregate Demand
|
The quantity demanded of all goods and services (Real GDP) at different prices levels, ceteris paribus.
|
|
|
Aggregate Demand (AD) Curve
|
A curve that shows the quantity demanded of all goods and services (Real GDP) at different price levels.
|
|
|
Real Balance Effect
|
The change in the purchasing power of dollar-denominated assets that results from a change in the price level.
|
|
|
Monetary Wealth
|
The value of a person's monetary assets. Wealth equals his or her monetary wealth ($1,000) plus nonmonetary wealth (car).
|
|
|
Purchasing Power
|
The quantity of goods and services that can be purchased with a unit of money. Purchasing power and the price level are inversely related: As the price level goes up (down), purchasing power goes down (up).
|
|
|
Interest Rate Effect
|
The changes in household and business buying as the interest rate changes (which, in turn, is a reflecton of a change in the demand for or supply of credit brought on by price level changes.)
|
|
|
International Trade Effect
|
The change in foreign sector spending as the price level changes.
|
|
|
Wealth
|
The value of all assets owned, both monetary and nonmonetary.
|
|
|
Exchange Rate
|
The price of one currency in terms of another currency
|
|
|
Appreciation
|
An increase in the value of one currency relative to other currencies
|
|
|
Depreciation
|
A decrease in the value of one currency relative to other currencies.
|
|
|
Aggregate Supply
|
The quantity supplied of all goods and services (Real GDP) at different price levels.
|
|
|
Short-Run Equilibrium
|
The condition that exists in the economy when the quantity demanded or Real GDP equals the (short-run) quantity supplied of Real GDP, this condition is met where the aggregate demand curve intersects the short-run aggregate supply curve.
|
|
|
Short-Run Aggregate Supply (SRAS) Curve
|
A curve that shows the quantity supplied of all goods and services (Real GDP) at different price levels.
|
|
|
Natural Real GDP
|
The Real GDP that is priduced at the natural unemployment rate. The Real GDP that is produced when the economy is in long-run equilibrium.
|
|
|
Long-Run Aggregate Supply (LRAS) Curve
|
The LRAS curve is a vertical line at the level of Natural Real GDP. It represents the output the economy produces when wages and prices have adjusted to their (final) equilibrium levels and neither producers nor workers have any relevant misperceptions.
|
|
|
Long-Run Equilibrium
|
The condition that exists in the economy when wages and prices have adjusted to their (final) equilibrium levels and workers do not have any relevant misperceptions. Graphically, long-run equilibrium occurs at the intersection of the AD and LRAS curves.
|
|
|
Say's Law
|
Supply creates its own demand. Production creates demand sufficient to purchase all the goods and services produced.
|
|
|
Recessionary Gap
|
The Condition in which the real GDP that the economy is producing is less than Natural Real GDP and the unemployment rate is greater than the natural unemployment rate.
|
|
|
Inflationary Gap
|
The condition in which the Real GDP that the economy is producing is greater than the Natural Real GDP and the unemployment rate is less than the natural unemployment rate.
|
|
|
Laissez-faire
|
A public policy of not interfering with market activities in the economy.
|
