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9 Cards in this Set

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Aggregate demand (AD) curve

A curve that shows the relationship between the price level and the quantity of real GDP demanded by households, firms, and the government.

Aggregate demand and aggregate supply model

A model that explains short run fluctuations in real GDP and the price level

Fiscal Policy

Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.

Long run aggregate supply LRAS curve

A curve that shows the relationship in the long run between the price level and the quantity of real GDP supplied.

Menu Costs

The costs to firms of changing prices.

Monetary policy
the actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomics policy objectives.
Short-Run aggregate supply SRAS curve
A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms.
Stagflation
A combination of inflation and recession, usually resulting from a supply shock.
Supply Shock
An unexpected event that causes the short-run aggregate supply is greater than the quantity demanded.