Save
Busy. Please wait.
Log in with Clever
or
show password
Forgot Password?
Don't have an account?  Sign up 
Sign up using Clever
or
Username is available taken
show password

Your email address is only used to allow you to reset your password. See our Privacy Policy and Terms of Service.

Already a StudyStack user? Log In

Reset Password
Enter the associated with your account, and we'll email you a link to reset your password.

Question

Aggregate Demand (AD) Curve:
click to flip
focusNode
Didn't know it?
click below
 
Knew it?
click below
Don't know

Question

if P rises in AD curve, according to the wealth effect...
Remaining cards (31)
Know
0:00
edit
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.

  Normal Size     Small Size show me how

ECON 202

Macroeconomics Final Exam: Chapter 12 AD-AS Model

QuestionAnswer
Aggregate Demand (AD) Curve: measures how much consumers want to buy at each price level
if P rises in AD curve, according to the wealth effect... buying power of money and other wealth falls, consumers feel poorer and buy less (C decreases)
if P rises in AD curve, according to the wealth effect... more money is required to buy a given quantity of g/s, increase demand for money causing increase in interest rates, higher interest rates makes borrowing less attractive and reduces I
Wealth effect of AD curve inverse relationship between price (P) and consumer spending (C)
Interest-rate effect of AD curve inverse relationship between price (P) and Investment Spending (I)
What factors would cause you to "move along" the AD curve? price level changes, all else constant
What factors would cause you to "shift" entire AD curve? changes in expectations, changes in wealth, macro policy
When is expansionary macro policy used in an economy? to combat a recession, to expand/ increase demand
When is contractionary macro policy used in an economy? reins in a boom, to reduce demand
What is the effect of expansionary macro policy on AD curve? Increase AD, shift AD curve to right (outward)
What is the effect of contractionary macro policy on AD curve? Decrease AD, shift AD curve to left (inward)
Fiscal Policy is changes in... gov. purchases, taxes, transfer programs
Monetary Policy is changes in... money supply, interest rates
Short-Run Aggregate Supply (SRAS) Curve relationship between fixed price (P) and amount of output supplied
What factors would cause you to "move along" the SRAS curve? price level changes, all else constant
What factors would cause you to "shift" entire SRAS curve? Changes in commodity prices, changes in nominal wages, changes in productivity
Long-Run Aggregate Supply (LRAS) Curve relationship between price (P) and real GDP (Y) supplied when price levels are fully flexible Vertical at Potential Output (Yp)
What determines Yp? K, H, T
What are the conditions of Yp? what the economy is able to produce when resources are fully utilized, unemployment at its natural rate ("full employment")
What curve do demand shocks shift? AD
A positive demand shock will... Increase AD, shift curve to right
A negative demand shock will... Decrease AD, shift curve to left
What curve do supply shocks shift? SRAS
A negative supply shock will... Shift SRAS to the left
A positive supply shock will... shift SRAS to the right
When do output gaps occur? when economy is not in LR equilibrium
In an output gap, if Y is below Yp... recessionary gap
In an output gap, if Y is above Yp... inflationary gap
How will the economy self-correct in a recessionary gap? the economy is operating below potential, so there is high unemployment and idling capacity. Over time, costs of wages will fall, SRAS will shift right, will go back to LR equilibrium
Recessionary gaps can be a result of _____ shocks negative supply or negative demand
How will the economy self-correct in a inflationary gap? the economy is operating above potential, so there is low unemployment and tight capacity. Over time, costs of wages will rise, SRAS will shift left, will go back to LR equilibrium
Inflationary gaps can be a result of _____ shocks positive demand
Created by: reganbobo15
Popular Economics sets

 

 



Voices

Use these flashcards to help memorize information. Look at the large card and try to recall what is on the other side. Then click the card to flip it. If you knew the answer, click the green Know box. Otherwise, click the red Don't know box.

When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.

If you've accidentally put the card in the wrong box, just click on the card to take it out of the box.

You can also use your keyboard to move the cards as follows:

If you are logged in to your account, this website will remember which cards you know and don't know so that they are in the same box the next time you log in.

When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. Although it may feel like you're playing a game, your brain is still making more connections with the information to help you out.

To see how well you know the information, try the Quiz or Test activity.

Pass complete!
"Know" box contains:
Time elapsed:
Retries:
restart all cards