econ final Flashcards
Change in Rates
Shifts AD
change in labor
shifts SRAS and LRAS
change in technology
shifts LRAS and SRAS
Change in taxes
shifts AD
change in capital
shift SRAS and LRAS
Change in gov. spending
shifts AD
change in exchange rates
Shifts AD
change in input costs
shifts SRASq
Wealth effect
Shifts AD
change in expected price level
Shifts SRAS
change in natural resources
shifts LRAS
optimism/pessimism
Shifts AD
adjustments to past expected price level
Shifts SRAS
three components of the industrial production index
manufacturing, utility, mining
A fortiori
From the stronger
what does the fed do to fix falling stock prices
buy bonds to lower the interest rate
what does the fed do to combat rising stock prices
sell bonds to raise the interest rate
what happens to interest rates when money supply increases
interest rates fall and AD shifts right
what do deficits do
they increase interest rates and decrease investments
classical model is appropriate for short run or long run
long run: real and nominal variables are determined separately in the long run
Phillips curve: policy makers would reduce inflation but raise unemployment if they:
decrease the money supply
ex vulgus scientia
from crowd, knowledge
If there is excess demand for money, then people will
withdraw money from interest bearing accounts, and the interest rate will rise
a fall in the price level results in firms having:
higher prices, which depresses their sales
increase in the price level is a reduction in what spending
household consumption and investment
lex parsimonia
law of succintness
liquidity preference theory
people have a preference for holding money in case of unforeseen expenses or as a precautionary measure.
what is measured on the philips curve
inflation rate vs. unemployment
how many points falling from the consumer confidence index means the economy will enter a recession
30
aggregate demand curve shows that a decrease in the price level
increases the real value of goods and services demanded in the economuy
Real GDP
variable most commonly used to measure short-run economic fluctuations. it is almost impossible to predicrt these fluctuations with accuracy
after an election…
inflation rises, so the central bank raises interest rates
when taxes decrease, consumption
increases as shown by a shift of the AD curve to the right
classical macroeconomic theory, changes in the money supply affect
variables measured in terms of money but not variables measured in terms of quantities or relative prices
what is not included in the 10 components of the LEI
unemployment rate
suum cuique tribuere
to render to every man his due
what helps to explain the slope of the AD curve?
the exchange rate effect, the wealth effect, the interest rate effect
oil prices fall due to
rising value of the dollar, slower global growth, and rising trade war disputes
if the economy starts from long-run equilibrium and aggregate demand shifts right, the central bank must
decrease the money supply so interest rates rise
the sticky wage theory suggests that when the price level rises more than expected…
production is more profitable and employment rises
what shifts money demand to the left?
decrease in the price level
why do some people question the phillips curve?
it doesn’t apply in the long run
if speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer US bonds,
the dollar would depreciate which would cause AD to shift to the right
sic semper tyrannus
thus always to tyrants
quot capita tot sensus
as many heads so many options
petitio principii
request of the beginning
ex facie
from the face
a contrario
from the opposite
ad absurdum
to absurdity
ad hominem
to the man
a fortiori
from the stronger
scio me nihil seire
i know that I know nothing
sapiente sat
enough for the wise
rem acu tetigisti
you have touched the point with the needle
alea iacta est
the die has been cast
lex parsimoniae
law of succintness
per capita
by heads
rerum caugnosere causas
to learn the causes of things
una hurundo no facet vere
one swallow does not make summer
