Macroecon chapter 8 Flashcards
Impact of price on consumption
Negative
Impact of price on wealth
Negative
Impact of wealth on consumption
Positive
Impact of price on AE
Negative + downward shift in AE curve
Impact of price on net export
Negative
Impact of price on import
Positive
Impact of price on export
Negative
AD curve definition
Combination of real GDP and P that allows AE to be equal to Y
Change of other factor on AD curve
AD curve shift right
Other factor influencing AD
AD = C + I + G +Nx
Impact of consumption on AD
Positive
Impact of investment on AD
Positive
Impact of government purchase on AD
Positive
Impact of export on AD
Positive
Impact of import on Ad
Negative
Positive relation between AD curve and other factors on graph
AD curve shift right
Negative relation between AD curve and other factors on graph
AD curve shift left
AS curve definition
Combination of P and Y given technology and price
Suppose factor price of input are constant (2)
ΔT = 0
ΔP = 0
AS curve is ________ slopped
Positively
ΔP cause… on the graph
Mvt along the AS curve
ΔOther factors cause… on the graph
Shift to the left
ΔT cause… on the graph
Shift to the right
If AS is elastic (2)
ΔAD -> ΔY > ΔP
ΔAD -> ΔY < ΔP
Since ΔAD = demand shock
ΔY and ΔP ahve the same sign
Since ΔAS = supply shock
ΔY and ΔP will have opposite sign
The distribution of the impact of demand shock and supply shock on P and Y depends on…
The elasticity of AD and AS curve
Impact of COVID on AD/AS
- Individuals work recovery from COVID -> As shock reverses relatively quickly
- Households/firms recovery from COVID -> AD shock reverses relatively quickly
