13. Aggregate Demand And Aggregate Supply

Question 1

Negative expectations.

Answer 1

When businesses expect future sales and profits to fall due to factors such as falling AD

Question 2

Accelerator effect.

Answer 2

The relation between a change in new investment and the rate of change of national income.

Question 3

Privatisation.

Answer 3

Sale of government assets to the private sector.

Question 4

Keynesian

Answer 4

The view of John Maynard Keynes, a very influential economist, who suggested how governments could cure mass unemployment.

Question 5

Classic view.

Answer 5

Economists that believed recessions and slumps could cure themselves.

Question 6

Long run AS

Answer 6

The economies productive capacity.

Question 7

Natural rate of unemployment.

Answer 7

The rate of unemployment that’s consistent with a stable rate of inflation.

Question 8

Monetary Policy Comitee

Answer 8

The Comitee of economists and central bankers who meet monthly to discuss the rate of interest.

Question 9

Supply side shock.

Answer 9

Something that will increase or decrease costs and therefore supply of all firms in an economy.

Question 10

Positive expectations.

Answer 10

When businesses expect the future sales and profits to increase due to factors such as increased AD