Econ: Macro: unit 3

Question 1

aggregate output

Answer 1

real GDP up, output up, employment up, unemployment down

Question 2

aggregate spending

Answer 2

C+G+I+Xn

Question 3

aggregate income

Answer 3

wage+rent+interest+profit

Question 4

What is Y

Answer 4

symbol for income

Question 5

if PL goes up

Answer 5

inflation goes up

Question 6

If PL goes down

Answer 6

inflation goes down

Question 7

aggregate demand

Answer 7

add up all together | all the goods/services (real GDP) that buyers are willing and able to purchase at different price levels

Question 8

if PL goes up (inflation), the real GDP (output) demanded?

Answer 8

falls

Question 9

if PL goes down (deflation), the real GDP (output) demanded?

Answer 9

increases

Question 10

What shifts AD and who is the demand of AD by?

Answer 10

C+I+G+Xn (consumers, investors, government, exports, imports) (consumers, businesses, governments, foreign countries)

Question 11

what does not shift the curve

Answer 11

Price level

Question 12

change in price level does what?

Answer 12

movement along the curve (NO SHIFT)

Question 13

high price levels do what to purchasing power of money?

Answer 13

reduce

Question 14

if PL goes up what happens to AD

Answer 14

goes down bc ppl wanna buy less

Question 15

high interest rates do what

Answer 15

discourage consumer spending and business investment

Question 16

Interest rate effect

Answer 16

PL goes up, ppl need more money for purchases, lenders need to charge higher interest rate to get a real return on their loans, which causes a change in goods/services with borrowed money (interest rate goes up, you are less likely to take our loans to improve your business)

Question 17

foreign trade effect

Answer 17

US PL goes up, foreigners purchase fewer US goods and americans buy more foreign goods (Xn goes down)

Question 18

an increase in CIGXn shifts AD where?

Answer 18

right

Question 19

changes in consumer spending

Answer 19

wealth, income, consumer expectations, income taxes,

Question 20

changes in investment spending

Answer 20

real interest rate, future business expectations, change in business inventories

Question 21

recessionary gap, where is LRAS

Answer 21

to the right

Question 22

inflationary gap, where is LRAS

Answer 22

to the left

Question 23

long run equilibrium, where is LRAS

Answer 23

middle

Question 24

what shifts AS

Answer 24

RAP (changes in resource prices, actions of government, and productivity)

Question 25

positive shock in AD

Answer 25

inflation up, employment up

Question 26

negative shock in AD

Answer 26

inflation down, employment down

Question 27

positive shock in AS

Answer 27

inflation down, employment up

Question 28

negative shock in AS

Answer 28

inflation up, employment down (NEVER WANT TO BE IN THIS)

Question 29

stagflation

Answer 29

stagnant economy and inflation

Question 30

demand pull

Answer 30

AD up, prices up, consumers want goods/services

Question 31

cost push

Answer 31

SRAS down, higher production costs increase prices

Question 32

causes of inflation

Answer 32

demand pull, cost push

Question 33

SRAS is upward sloping since wages and resources prices are what? what relationship is SRAS direct with?

Answer 33

sticky and direct relationship between PL and RGDP

Question 34

LRAS wages and resources are what

Answer 34

flexible, no relationship between PL and
RGDP