Aggregate Supply and Aggregate Demand

Question 1

Aggregate Supply

Answer 1

The sum of all the supply in the economy.

Question 2

Aggregate Demand

Answer 2

The total demand for final goods and services in an economy at a given time.

Question 3

Changes in Aggregate Supply

Answer 3

Determinants of aggregate supply
Shift factors
Collectively position the AS curve
Changes raise or lower per-unit production costs.

Question 4

Changes in Population

Answer 4

birth, death, immigration, emigration.

Question 5

Changes in Technology

Answer 5

Productivity improvements from technological progress.

Question 6

Circular Flow Model

Answer 6

A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.

Question 7

Equilibrium in Macro Markets

Answer 7

In economics, economic equilibrium is a situation in which economic forces such as supply, and demand are balanced and in the absence of external influences the values of economic variables will not change. Affected by Aggregate Demand and Aggregate Supply.

Question 8

Foreign Exchange Market

Answer 8

A market for converting the currency of one country into that of another country.

Question 9

Goods and Services Market

Answer 9

A market in which firms are sellers of what they produce and households are buyers.

Question 10

Loanable Amount

Answer 10

Deposits - Mandatory Reserves

Question 11

Loanable Funds Market

Answer 11

A hypothetical market that illustrates the market outcome of the demand for funds generated by borrowers and the supply of funds provided by lenders. The supply of savings and the demand for loans.

Question 12

LRAS (Long Run Aggregate Supply)

Answer 12

LRAS a curve that shows the relationship between price level and real GDP that would be supplied if all prices, including nominal wages, were fully flexible; price can change along the LRAS, but output cannot because that output reflects the full employment output.

Question 13

LRAS Shift Factors

Answer 13

1. resources
2. technology
3. institutions
4. population
5. capital stock

Question 14

Natural Resources

Answer 14

Raw materials supplied by nature.

Question 15

Resource Market

Answer 15

A market that supplies, firms, companies, and organizations with the needed resources in trade for compensation.

Question 16

Resource Market Fluctuations

Answer 16

Caused by changes in labor, materials, machines, and other outside factors.

Question 17

Resource Prices

Answer 17

Changes supply; the amount producers have to pay for things they use.

Question 18

SRAS (Short Run Aggregate Supply)

Answer 18

SRAS the relationship between planned national output (GDP) and the general price level. We assume that productivity and costs of production and the state of technology is constant in the short run when drawing SRAS.

Question 19

Short Run vs. Long Run

Answer 19

The short run-in macroeconomics is a period in which wages and some other prices are sticky. The long run is a period in which full wage and price flexibility, and market adjustment, has been achieved, so that the economy is at the natural level of employment and potential output.

Question 20

Short Run Macroeconomic Equalibrium

Answer 20

When the quantity of aggregate output supplied is equal to the quantity demanded.

Question 21

SRAS Shift Factors

Answer 21

1. Changes in Resource Price
2. Changes in Expected rate of Inflation.
3. Other supply shocks.

Question 22

Supply Shocks

Answer 22

Sudden, unexpected changes in aggregate supply.

Question 23

Unanticipated decrease in AD

Answer 23

Will increase the amount of supply available and may lessen the price.

Question 24

Unanticipated increase in AD

Answer 24

Will lessen supply and increase price.