lesson 14 - aggregate demand

Question 1

price level

Answer 1

some measure that captures all of the current prices in the economy, CPI or GDP deflator are two ways

Question 2

aggregate demand

Answer 2

graphic model that showcases the relationship between price level and spending in REAL GDP, AD curve shows that when price level decreases, real GDP goes up

Question 3

change in aggregate demand

Answer 3

shift in the entire ad curve, occurs due to a change in either category, not response to change in price level

Question 4

movement along ad curve

Answer 4

change in amt demanded due to change in price level

Question 5

interest-sensitive consumption

Answer 5

you are more likely to take out loans and buy expensive things with loans if interest is low

Question 6

real wealth effect

Answer 6

when you can buy more you feel as if you are wealthier

Question 7

interest rate effect

Answer 7

when goods cost less you put more into savings –> more money for a bank to use –> interest rates are lower –> more consumption

Question 8

exchange rate effect

Answer 8

price change in one country leads to more goods being purchased in another country

Question 9

fiscal policy

Answer 9

the use of taxes, government spending, government transfers impact on real gdp

Question 10

monetary policy

Answer 10

use of money supply to impact interest rates, affects real gdp