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;
34 Cards in this Set
- Front
- Back
|
when we say that potential GDP is exogenous with respect to the price level, we refer to...
|
The fact that the long-run AS-curve shifts to the right over time.
|
|
|
The Keynesian aggregate supply curve implies that....
|
The price level is unaffected by current levels of GDP.
|
|
|
When will AS-curve be horizontal?
|
If Nominal wages do not change even if there is high unemployment.
|
|
|
The slope of the AS-curve becomes steeper when?
|
Wages become more flexible, and
as the economy approaches full employment. |
|
|
A shift of the AD-curve to the right could be caused by...
|
A decrease in taxes..
|
|
|
A decrease in aggregate demand could be casued by.....
|
A decrease in consumer confidence.
|
|
|
Total Crowding out implies that?
|
Every dollar increase in gov spending is offset by a dollar decreased in private spending.
|
|
|
Neutrality of money means that money expansion.....
|
Increases price, but leaves income and interest rates unchanged.
|
|
|
Neutrality of money exists?
|
In the classical supply curve case
|
|
|
If Nominal wage rates were completely flexible, then..
|
Fiscal policy would affect real money balances but not output..
|
|
|
Wages are considered to be sticky rather than flexable since..
|
Firms are unsure about their competitors behavior and only reluctantly change prices and wages following a change in aggregate demand.
|
|
|
The link between Inflation and Unemployment is called...
|
The phillips Curve.
|
|
|
The coordination approach to the Phillips curve focuses on the fact that....
|
Firms are unsure about their competitors behavior and are therefore reluctant to change wages and prices following a change in aggregate demand.
|
|
|
The natural rate of unemployment is...
|
The result of Labor market friction---People entering the labor force, changing careers ects.
|
|
|
The upward sloping AS-curve will shift to the left if...
|
Actual output is higher than the full-employment level.
|
|
|
In an AS-AD model with an upward-sloping short-run AS-curve, which is most likely to occur if the gov. increases income taxes?
|
Price and interest rates will decrease in the short and long run while output will be negatively affected in the short-run.
|
|
|
In an AS-AD model with an upward sloping AS-curve, the most likely effects of fiscal expansion would be....
|
An increase in prices and interest rates, but a decrease in real money balances......
|
|
|
In an AS-AD model with an upward-sloping (Short-Run) AS-curve, what would happen if oil prices increased and the Fed responded by restricting money supply?
|
Real output would decrease but we cant tell what would happen to prices...
|
|
|
In the (Long-Run), real money balances are...
|
Not affected with restrictive monetary policy, but increase if restricitve fiscal policy is employed.
|
|
|
In the (Long-Run) an increase in the money supply will....
|
cause both Nominal wage rates and the Price level to rise proportionately, leaving the real wage rate and output unchanged.
|
|
|
In the static AD-AS model, what is the most likely Long-Run outcome of an oil price increases, if no policy change is implemented?
|
Real wages decline, while
Levels of output and prices remain unchanged. |
|
|
What is the Medium-Run result of an oil shock.
|
A decrease in real GDP.
|
|
|
The Sacrifice ratio is defined as..
|
The % of output lost for each 1 percent reduction in the rate of inflation.
|
|
|
Structural Unemployment is...
|
The unemployment that exists at the natural rate of unemployment.
|
|
|
Natural rate of unemployment will increase if...
|
Unemployment benefits are increased.
|
|
|
The natural rate of unemployment can be reduced by..
|
training and skills programs that focus on teenagers and the long-term unemployed.
|
|
|
Wage Indexation:
|
Increases Nominal wages periodically in accordance with the increase in prices over a given time period.
|
|
|
In an Adverse supply shock, wage indexation is likely to...
|
Lead to a wage-price spiral.
|
|
|
According to the Rational Expectations equilibrium approach...
|
Unannounced changes in money supply temporarily chnage the level of output and prices.
|
|
|
The Rational Expectation Equilibrium approach...
|
Attemps to build macro theorys on Microeconomic foundations.
|
|
|
Which of the following is NOT reflected in a shift of the AD-curve.
|
A change in real money balances due to a change in the price level.
|
|
|
If the Gov wanted to maintain a fixed level if aggregate demand, it would need to respond to a decrease in money supply by...
|
Increaseing Gov transfer payments.
|
|
|
Expansionary fiscal policy is very effective in increasing the level of actual output..
|
If the economy is in a recession.
|
|
|
The fact that Nominal wages are fixed by a contract at the beginning of a period while prices of goods may change within that period, implies that..
|
Firms want to supply more output when prices increase since real wage rate is lower...
|
