Module 18

Question 1

aggregate supply curve

Answer 1

relationship between agreggate price level and aggregate output

Question 2

profit

Answer 2

price - production costs

production costs are not flexible in the short run

Question 3

nominal wages

Answer 3

dollar amount of a given wage

Question 4

sticky wages

Answer 4

nominal wages that are slow to fall even in the face of high unemployment and slow to rise in the face of labor shortages

Question 5

short run aggregate supply surve

Answer 5

relationship between ag price level and output supplied that exists in the short run when production costs are fixed

Question 6

causes of shifts in SRAS

Answer 6

1) changes in commodity prices
2) changes in nominal wages
3) changes in productivity

Question 7

comodity

Answer 7

standardized input bought and sold in bulk quantities (ex oil)

Question 8

long run

Answer 8

period of time over which prices are fully flexible (rather than sticky)

Question 9

long run aggregate supply curve

Answer 9

relationship between ag price level and quantity ag output supplied that would exist if all prices were fully flexible

Question 10

why does LRAS not depend on PL?

Answer 10

if u cut all prices, for example via deflation, then output would stay the same because all the same products would still be profitable

Question 11

potential output

Answer 11

horizontal intercept of LRAS

Question 12

causes of LRAS shift

Answer 12

1) change in quantity of resources
2) change in quality of resources (ex better edu)
3) change in tech