Econ: Macro: unit 3 Flashcards

1
Q

aggregate output

A

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

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2
Q

aggregate spending

A

C+G+I+Xn

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3
Q

aggregate income

A

wage+rent+interest+profit

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4
Q

What is Y

A

symbol for income

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5
Q

if PL goes up

A

inflation goes up

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6
Q

If PL goes down

A

inflation goes down

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7
Q

aggregate demand

A

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

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8
Q

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

A

falls

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9
Q

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

A

increases

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10
Q

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

A

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

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11
Q

what does not shift the curve

A

Price level

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12
Q

change in price level does what?

A

movement along the curve (NO SHIFT)

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13
Q

high price levels do what to purchasing power of money?

A

reduce

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14
Q

if PL goes up what happens to AD

A

goes down bc ppl wanna buy less

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15
Q

high interest rates do what

A

discourage consumer spending and business investment

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16
Q

Interest rate effect

A

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)

17
Q

foreign trade effect

A

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

18
Q

an increase in CIGXn shifts AD where?

19
Q

changes in consumer spending

A

wealth, income, consumer expectations, income taxes,

20
Q

changes in investment spending

A

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

21
Q

recessionary gap, where is LRAS

A

to the right

22
Q

inflationary gap, where is LRAS

A

to the left

23
Q

long run equilibrium, where is LRAS

24
Q

what shifts AS

A

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

25
positive shock in AD
inflation up, employment up
26
negative shock in AD
inflation down, employment down
27
positive shock in AS
inflation down, employment up
28
negative shock in AS
inflation up, employment down (NEVER WANT TO BE IN THIS)
29
stagflation
stagnant economy and inflation
30
demand pull
AD up, prices up, consumers want goods/services
31
cost push
SRAS down, higher production costs increase prices
32
causes of inflation
demand pull, cost push
33
SRAS is upward sloping since wages and resources prices are what? what relationship is SRAS direct with?
sticky and direct relationship between PL and RGDP
34
LRAS wages and resources are what
flexible, no relationship between PL and RGDP