aggregate demand and supply definitions

Question 1

gross investment

Answer 1

the total amount a country or company spends on new capital good

Question 1

net investment

Answer 1

gross investment minus depreciation

Question 2

net trade balance

Answer 2

the total value of exported goods and services minus the total value of imported products.

Question 3

tariff

Answer 3

tax on imports

Question 4

aggregate supply

Answer 4

total amount producers in economy are willing and able to supply at a given price level in given time period

Question 5

short run aggregate supply

Answer 5

shows total planned output when prices in economy can change but prices and productivity of all factor inputs = constant

Question 6

long run aggregate supply

Answer 6

output when prices can change
measure of a countrys potential output.

Question 7

classical LRAS

Answer 7

measure of countrys potential output , shows productive potential of ecconomy - full capacity output

assume in long run wages = flexible and unemployment = eliminated as real wages adjust

Question 8

Keynesian lRAS

Answer 8

in long run wages are sticky and may not fall far enough to eliminate unemployment.

Question 9

accelerator theory

Answer 9

theory level of investment is related to past changes in income

Question 10

net trade

Answer 10

exports - imports

Question 11

net investment

Answer 11

gross investment minus depreciation

Question 12

supply-side shocks

Answer 12

factors which cause short run aggregate supply curve to shift

Question 13

investment

Answer 13

addition of capital stock to economy

Question 14

budget deficit

Answer 14

gov spending higher than taxation in a fiscal year

Question 15

budget surplus

Answer 15

gov spending less than taxation