Macroecon chapter 9 Flashcards
1
Q
Potential GDP is equal to…
A
Long-Run AS
2
Q
What kind of curve is LRAS
A
Vertical curve
3
Q
What happens when AD intersect AS at the left of Yp
A
Recession gap
4
Q
What happens when AD intersect AS at the right of Yp
A
Inflationary gap
5
Q
Wage rate relation with U rate on Philip Curve
A
Negative
6
Q
Inflation rate relation with U rate on Philip Curve
A
Negative
7
Q
Potential GDP Yp is a function of… (4)
A
- Tech
- Human Capita
- Labour force
- Natural resources
8
Q
Expansionary fiscal polity (t and G)
A
- Δt < 0
- ΔG > 0
- ↑t or ↓G
9
Q
Contractionary fiscal policy (t and G)
A
- Δt > 0
- ΔG < 0
10
Q
Paradox thrift at short run (2)
A
- S↑ -> Y↓
- S↑ -> C↓ => AD↓ => Y↓
11
Q
Paradox thrift at long run (2)
A
- S↑ -> Yp↑
- S↑ -> I↑ -> tech↑ -> Yp↑
12
Q
Multiplier is…
A
An automatic stabilizer for the economy
13
Q
When does transfer ↑
A
Recession
14
Q
E, insurance cause…
A
C↑ => AD↑ => return at LR equilibrium
15
Q
Limitation s of discretionary fiscal policy (3)
A
- Time lag
- Temporary vs. permanent tax change
- Fine tuning vs. gross tuning
