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17 Cards in this Set

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Nominal Wage
the wage measured in current doallars; the dollar amount on a paycheck
real wage
the wage in dollars of constant purchasing power; the wage measured in terms of the quantity of goods and services it will buy
potential output
the economy's maximum sustainable output, given the supply of resourses, technology and production incentives; the output level when there are no surproses abotu the price level
natural rate of unemployment
the unemployment rate when the economy produces its potential output
short run
a period during whcih some resource prices especially those for labor are fixed by explicity or implicit agreements
short run aggregate supply curve
a curve that shows a direct realtionship between the price level and real GDP supplied in the short run, other things constant
short run equilibrium
the price level and real GDP that occur when the aggregate demand curve intersects the short run aggregate supply curve
expansionary gap
the amount by whcih ourtpu in the short run exceeds the conomy's potential output
long run
a period during whcih wage contracts and resource price agreements can be renegotiated; thare are no surprises about eh economy's actual price level
long run equilibrium
the price level and real GDP that occurs when the actual price level equals the expedt price level real GDP supplied equals potential output, and real GDP supplied equals real GDP demandedq
contractonary gap
the amount by which acutla output in the short run falls short f the economy's potential output
long run aggregate supply curve
a vertical line at the conomy's potential aoutput aggregate supply when there are no surpises about the price level and all resource contracts cna be renegotiated
coordination failure
a situation in which workers adn employers fail to achieve and outcome that all would prefer
supply shocks
unexpected events that affect the aggregate supply, sometimes only emporarily
beneficial supply shocks
unexpected events that icnresase aggregate supply sometiems only temporarily
adverse supply shocks
unexpected events that r4educe aggreagae supply, sometiems only temporarily
hysteresis
the theory that the natural rate of unemployment depends in part on the recent history of unemployment; high unemployment rates increase tha ntural rate of unemployment