Term
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Definition
| The total of all planned production for the economy. |
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Term
| long-run aggregate supply curve |
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Definition
| A vertical line representing the real output of goods and services after full adjustment has occurred. |
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Term
| What can the long-run aggregate supply curve be viewed as representing? |
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Definition
| It can be viewed as representing the real GDP of the economy under conditions of full employment --- the full-employment level of real GDP. |
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Term
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Definition
| The value of a current sum expressed in terms of prices in a base year. |
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Term
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Definition
| The various resources in an economy, including both physical resources and such human resources as ingenuity and management skills. |
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Term
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Definition
| The total of all planned expenditures in the entire economy, |
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Term
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Definition
| A curve showing planned purchase rates for all final goods and services in the economy at various price levels, all other things held constant. |
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Term
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Definition
| The change in expenditures resulting from a change in the real value of money balances when the price level changes, all other things held constant. |
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Term
| What is another name for the real-balance effect? |
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Definition
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Term
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Definition
| When higher price levels increase the interest rate, which in turn causes businesses and consumers to reduce desired spending due to the higher cost of borrowing. |
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Term
| What are the two reasons that the aggregate demand curve slopes downward? |
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Definition
| The interest rate effect and the open economy effect. |
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Term
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Definition
| When higher prices result in foreign residents desiring to buy fewer U.S.-made goods, while U.S. residents now desire more foreign-made goods, thereby reducing net exports. |
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Term
| What does the open economy effect due to the amount of real goods and services purchased in the United States? |
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Definition
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Term
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Definition
| A persistent decline in prices resulting from economic growth in the presence of stable aggregate demand. |
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