Chapter 20: Aggregate supply and the interaction of aggregate demand and supply

Question 1

Define short-run aggregate supply

Answer 1

A curve showing how much output firms would be prepared to supply in the short run at any given overall price level

Question 2

Define neoclassical economists

Answer 2

Economists who argued that markets would allow the economy to adjust to equilibrium

Question 3

Define monetarist school

Answer 3

Group of economists who argued that the economy would always converge on an equilibrium level of output

Question 4

Define natural rate of output

Answer 4

The long-run equilibrium level of output that corresponds to full employment

Question 5

Define keynesian school

Answer 5

A group of economists who believed that the macroeconomy could settle at an equilibrium that was below full employment