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Ch. 13-AD/AS
AD/AS Fiscal Policy
| Question | Answer |
|---|---|
| Another name for national economics is _____________. | Macroeconomics |
| The total market value of all final goods and services produced annually in an economy is called __________ , or GDP.A good that has not yet reached its final user is called an _______________ , and is not counted in GDP. | Gross Domestic product (GDP); intermediate good |
| The services of a worker who is always paid in cash, the services of unpaid household workers, and the purchase of a used car is(are / are not) ____________ counted in the GDP. | are not counted |
| When C stands for ____________ , I for _________________ , G for ____________ expenditures, X for net ___________ , then the following equation shows how to calculate GDP: GDP = C + I + G + X. | consumption; investment, government; net exports (exports - imports or X - M) |
| Of the four categories of spending, _____________________ accounts for the largest amount. | consumption |
| The two ways of calculating GDP are the ___________________ approach and the _____________ approach. | income; expenditure |
| __________ personal income is your personal income after subtracting out taxes paid. | Disposable |
| _________ payments are welfare, social security, and other supplementary payments that state or the federal govt. makes to individuals | Transfer |
| T or F: Regardless of which way you calculate GDP, you should get the same result. | True |
| What do economists call a general rise in prices? ____________________ a general decline in prices? _______________________ | inflation; deflation |
| The ability to buy goods and services with money is called _______________ | purchasing power |
| GDP adjusted for price changes, or inflation, is called ____________ | Real GDP |
| If real GDP goes up in an economy, then what can we conclude? | the total number of goods and services has gone up |
| What is the CPI and what does it measure? | consumer price index and it measures the rise and fall of prices for consumer goods and services |
| What is the PPI and what does it measure? | producer price index and it measures the rise and fall of the prices of resources (land, labor, and capital) |
| What is per capita GDP and why is it useful? | GDP divided by population and allows economists to compare countries of different sizes |
| ___________ represents the total spending in the economy at alternate price levels and the slope of this curve is _________________. | Aggregate demand (AD); negative |
| ____________ represents the total output of the economy at alternate price levels and the slope of this curve is ________________. | Aggregate supply (AS);positive |
| __________ inflation is caused by increasing demand for output while ________________ inflation is caused by rising costs of production. | Demand-pull; cost-push |
| If aggregate demand falls , the equilibrium level of income (real GDP) _________ and unemployment ___________ . | falls; rises |
| An increase in aggregate supply leads to a(n) ________________ in the equilibrium level of national income and _____________ prices. | increase; lower |
| Aggregate demand (AD) consists of _________________ plus _______________ plus _____________________________ plus _______________________ , or C+I+G+X. | consumption + investment+ government spending+ exports- imports (net exports) |
| If income, wealth, and/ or population growth increases, then consumption __________. | increases |
| Higher taxes lower disposable income and __________________ consumption. | decreases |
| If interest rates fall then investment (the amount that businesses spend on capital goods) will ____________. | increase |
| When domestic income or domestic prices rise, net exports ______________ . | decrease |
| When the price level falls, the value of household and business assets (increases / decreases) ________ . Households and firms spend (more / less) __________ , and aggregate expenditures (rise / fall) ___________ . This is called the ___________ effect. | increases; more;rise;wealth |
| When prices increase, people and businesses need ______ money. They _______ bonds, causing interest rates to __________ and investment and aggregate expenditures to ___________. This is called the ________ effect. | more; sell; rise ;fall; interest rate effect |
| When the price level falls, domestic goods become _______________ for foreigners. Net exports____________ , and aggregate expenditures__________. This is called the __________ effect. | cheaper; increase; increase; international trade |
| Positive expectations about the economy, higher foreign incomes, and/ or increased government spending will cause a shift in aggregate demand to the _____________. | right |
| The __________ -run is the period of time when costs are variable and the ______ -run the period of time is when all production costs remain constant. | long run; short run |
| When the price of resources fall, the short-run aggregate supply curve shifts to the ______________. | right |
| New technology can cause the short-run AS curve to shift to the ____________ as more output can be produced at a lower cost. | right |
| The equilibrium level of income is where ___________________ equals __________________________ or where the AD and AS curves intersect. | aggregate demand (total spending); aggregate supply (total output) |
| The _________-run aggregate supply curve is a vertical line at the potential level of national income. | long run |
| The recurring pattern of real GDP rising and falling is called a(n) _________________ ____________. | business cycle |
| The four phases of the business cycle in order are ______________ , ____________________, ____________________, and ___________________. | peak; contraction; trough; expansion |
| A(n) ___________________________ is a prolonged period of severe economic contraction while a _____________________ occurs when real GDP has decreased for at least 2 quarters, or 6 months. | depression; recession |
| ____ indicators change before real GDP changes, ____ indicators are economic variables that tend to change at the same time real output changes, and variables that do not change their value until after the value of real GDP has changed are called ___ ind | leading; coincident; lagging |
| A worker changing jobs is considered ______________________ unemployed. | frictionally |
| Increasing use of computers or robots may cause _____________________ unemployment. | structural |
| The labor force does not include: | military personnel, prisoners, and those in mental institutions |
| The labor force includes those ___ yr. of age or older who are _____________ for work or who are currently ___________ | 16; looking; working |
| A person who loses her job at the mill because the market for wood has hit a recession is considered _________________ unemployed. | cyclically |
| A strawberry picker who is out of work because the season is over is considered _________________ unemployed. | seasonally |
| A civil engineer working as a math tutor would be considered _______. | underemployed |
| Full employment, or the natural rate of unemployment means there is ____________________ unemployment. | no cyclical |
Created by:
teacherdavidfrost
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