Exam 2 terms (these were not even needed what a waste of my time frl) Flashcards
Aggregate demand
aggregate demand (AD)
the amount of total spending on domestic goods and services in an economy
GDP
GDP; Monetary or money representation of goods and services
Exports
products (goods and services) made domestically and sold abroad
Foreign purchase effect
)foreign purchase effect; when the price falls, foreigners buy more US goods and vice versa
Interest rate effect
(a change in demand caused by the impact of a price change on the interest rate); higher price— higher interest rate—lower AD
Real balance effect
(a change in demand caused by the impact of a price change on the value of wealth and savings) higher price—lower value of savings—higher savings—lower consumption
Marginal propensity to consume
marginal propensity to consume; the percentage of a change on income that is spent
Automatic stabilizers
automatic stabilizers-fiscal policies that automatically adjust to meet the economy’s needs
Fiscal policies
the use of gov purchases, transfer payments, taxing, borrowing, and other gov financial instruments to manage and strengthen the economy.
Expansionary gap
when the actual output exceeds potential output
Contractionary gap
when the actual output is below potential input
C+I+G+(x-m)
AD= C+I+G+(x-m)
C=consumption
I=investment
G=gov spending
X=exports
M=imports
CONSUMPTION CURVE
Positive slope. Higher income= higher consumption
Investment demand
Downward slope. Lower interest= higher investment
Net wealth
F‼️ck b🧈tches get money 🤑
