macroeconomics ch 8 Aggregate Demand & Aggregate Supply
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| aggregate demand (AD) | show 🗑
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| show | downward slope b/c 1. real balance effect (wealth), 2. interest rate effect, 3. int'l (foreign) trade effect; inverse relationship between the Price level & the qty demanded of Real GDP
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| AD curve equation | show 🗑
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| show | the change in the purchasing power of dollar-denominated assets that results fr a change in the price level; basically when your money means more, you buy more; house to house movement
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| interest rate effect | show 🗑
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| international trade effect | show 🗑
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| show | the value of a person's monetary assets only
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| wealth | show 🗑
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| exchange rate | show 🗑
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| appreciation | show 🗑
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| depreciation | show 🗑
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| show | the average # of times a dollar is spent to buy final goods & services in a yr
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| show | the qty supplied of all goods & services (Real GDP) at different price levels, ceteris paribus
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| Short-Run Aggregate Supply (SRAS) Curve | show 🗑
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| show | wage rates (inverse), prices of nonlabor inputs (inverse), productivity (direct), supply shocks (beneficial SRAS up, adverse SRAS down)
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| short-run equilibrium | show 🗑
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| show | the real GDP that is produced at the natural unemployment rate; the real GDP that is produced when the economy is in long-run equilibrium; Qn
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| show | a vert line at the level of natural real GDP; represents the output the economy produces when wages & prices have adjusted to their equilibrium levels when wkrs do not have any relevant misperceptions; the economy's potential
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| show | the condition that exists in the economy when wages & prices have adjusted to their (final) equilibrium level when wkrs don't have any relevant misperceptions; graphically LR equilibrium occurs at the intersection of the AD & LRAS curves
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| LRAS GDP names | show 🗑
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| show | economy is too hot = left of SR equilibrium, Inflationary Gap = too much spending; economy is too cold = right of SR equilibrium, Recessionary/Contractionary Gap; economy is just right at LR equilibrium when at SR equilibrium
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| show | where you would use the interest rate effect - PL down, PP$ up = more borrowers <aggregate qty demanded increased>, int rate down & PL up, PP$ down = less borrowers <aggregate qty demanded decreased>, int rate up; s = savers, D = borrowers, int rate y-ax
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| difference between SR & LR | show 🗑
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