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Macroeconomics > Class Chapt 8 > Flashcards

Class Chapt 8 Flashcards

1
Q

what is Quantity of Real GDP Supplied?

A

Is the total quantity that firms plan to produce during a given period

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2
Q

What is Aggregate supply?

A

Is the relationship between the quantity of real GDP supplied and the price level.

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3
Q

Which are the two time frames associated with different states of the labour market?

A
  • Long-run aggregate supply
  • Short-run aggregate supply
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4
Q

What is Long-run aggregate supply?

A

Is the relationship between the quantity of real GDP supplied and the price level when full employment (real GDP = Potentinal GDP)

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5
Q

What does LAS stand for

A

Long run Agregate Suply

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6
Q

What is Short-run aggregate supply

A

s the relationship between the quantity of real GDP supplied and the price level when the money wage rate, the prices of other resources, and potential GDP remain constant.

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7
Q

What does SAS stand for?

A

Short-term Aggregate Supply

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8
Q

In LAS, price level up + wage rate up = ?

A

price level up + wage rate up = real and Potential GDP are equal.

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9
Q

In short run, A rise in the price level with no change in the money wage rate = ?

A

A rise in production.

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10
Q

What happens to Real GDP If wage rate no change + prices rise = ?

A

If wage rate no change + prices rise = Q of Real GDP rises

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11
Q

what can make changes in Aggregate Supply?

A
  1. Changes in potential GDP
  2. Changes in money wage rate (and other factor prices)
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12
Q

What happens in the aggregate supply when potential GDP increases?

A

both the LAS and SAS curves shift rightward.

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13
Q

How can Potential GDP increase?

A
  1. The full-employment quantity of labour increases
  2. The quantity of capital (physical or human) increases
  3. An advance in technology occurs
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14
Q

What is “quantity of real GDP demanded”?

A

is the total amount of final goods and services produced in Canada that people, businesses, governments, and foreigners plan to buy.

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15
Q

4 GDP Demand Factors

A

1.The price level
2.Expectations
3.Fiscal policy and monetary policy
4.The world economy

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16
Q

A tax cut or an increase in transfer payments increases households’ disposable income > increasing consumption. What factor of demand is this?

A

Fiscal policy and monetary policy

17
Q

A fall in the foreign exchange rate lowers the price of domestic goods and services relative to foreign goods and services. What factor of demand is this?

A

The World Economy

18
Q

When aggregate demand increases, the AD curve shifts?

A

Right

19
Q

What AD stands for?

A

Aggregate demand

20
Q

when does Long-run macroeconomic equilibrium happen?

A

At the intersection of the AD and LAS curves.

21
Q

above full-employment equilibrium is when?

A

real GDP exceeds potential GDP

22
Q

full-employment equilibrium is when ?

A

real GDP = potential GDP

23
Q

below full-employment equilibrium is when?

A

potential GDP exceeds real GDP

24
Q

What is the “inflationary gap”

A

The amount by which potential GDP exceeds real GDP, over full employment

25
Q

What is the recessionary gap?

A

The gap when real GDP is less than potential GDP, under full employment

26
Q

An increase in aggregate demand shifts the AD curve to the ?

A

Right

27
Q

When does inflation occur In the long run?

A

When the quantity of money grows faster than the potential GDP.

28
Q

What are the 2 sources of inflation?

A
  1. Demand-pull inflation
  2. Cost-push inflation
29
Q

What is a “stagflation”

A

The combination of a rising price level and a decreasing real GDP

30
Q

The long-run aggregate supply curve (LAS) is vertical because?

A

The quantity of potential real GDP does not change when the price level changes.

31
Q

What shifts the short-run aggregate supply (SAS) curve but not the long-run aggregate supply (LAS) curve?
A) a change in input prices.
B) a change in the quantity of capital.
C) an improved technology.
D) an increase in population

A

A) a change in input prices

32
Q

A technological advance shifts what curve in which direction?

A

SAS and LAS curves rightward.

33
Q

Which one of the following variables can change without creating a shift of the aggregate demand curve?
A) the interest rate
B) the price level
C) the tax rate
D) expectations about inflation
E) monetary policy

A

B) the price level

34
Q

A increase in government expenditure shifts the Agregate demand to the ?

A

Right

35
Q

A recessionary gap is the amount by which?

A

potential GDP exceeds real GDP.

36
Q

Stagflation is consistent with the story of ________ inflation.
A) cost-pull
B) cost-push
C) demand-pull
D) demand-push
E) push-pull

A

B) cost-push

37
Q

4 characteristic of The original Phillips Curve?

A

A) shows an immediate trade-off between inflation and unemployment.
B) is a short-run relationship.
C) can shift if inflation expectations change over time.
D) can shift if the natural rate of employment changes over time.

Macroeconomics (6 decks)

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