Macroeconomic work sheet 6 Flashcards
1
Q
Positive Output Gap
A
If real GDP is greater than potential GDP then there is a positive output gap.
2
Q
Net worth of households
A
not sure?
3
Q
Cumulative Causation
A
When an initial change causes an eventual change that is larger.
4
Q
The marginal propensity to withdraw
A
The proportion of an increase in national income that is withdrawn from the circular flow: mpw = ∆W/∆Y, where mpw = mps + mpt + mpm.
5
Q
the international substitution effect
A
not sure?
6
Q
Policy invariance result
A
Expected changes in policy only impact on prices - even in the short run. There are no real effect:
- Output remains at the potential level
- Unemployment remains at its natural level
7
Q
Expectations augmented Phillips Curve
A
A (short-run) Phillips curve whose position depends on the expected rate of inflation.
8
Q
hysteresis
A
Our current path of output can affect our future
