Term
|
Definition
| Shows the relationship between the aggregate price level and the quantity of aggregate output supplied |
|
|
Term
|
Definition
| The dollar amount of the wage paid |
|
|
Term
Short-Run aggregate supply curve
(SRAS) |
|
Definition
| Shows the relationship between the aggregate price level and the quantity of aggregate output supplied that exists in the short run, the time period when many production costs can be taken as fixed |
|
|
Term
Long-Run aggregate supply curve
(LRAS) |
|
Definition
| Shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible |
|
|
Term
|
Definition
| The level of real GDP the economy would produce if all prices, including nomminal wages, were fully flexible |
|
|
Term
|
Definition
| shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world |
|
|
Term
| Wealth effect of a change in the aggregate price level |
|
Definition
| The effect on consumer spending caused by the effect of a change in the aggregate price level on the purchasing power of consumers' assets |
|
|
Term
| Interest rate effect of a change in the aggregate price level |
|
Definition
| The effect on consumer spending and investment spending caused by the effect of a change in the aggregate price level on the purchasing power of consumers' and firms' money holding |
|
|
Term
Marginal Propensity to Consume
(MPC) |
|
Definition
| the increase in consumer spending when disposable income rises by $1 |
|
|
Term
Marginal Propensity to Save
(MPS) |
|
Definition
| the increase in household savings when disposable income rises by $1 |
|
|
Term
| Autonomous change in aggregate spending |
|
Definition
| an initial change in the desired level of spending by firms, households, and government at a given level of real GDP |
|
|
Term
|
Definition
| The ratio of the total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change |
|
|
Term
|
Definition
| The aggregate supply curve and the aggregate demand curve are used together to analyze economic fluctuations |
|
|
Term
| Short-Run Macroeconomic equilibrium |
|
Definition
| When the quantity of aggregate output supplied is qual to the quantity demanded |
|
|
Term
| Short-Run equilibrium aggregate price level |
|
Definition
| the aggregate price level in the short-run macroeconomic equilibrium |
|
|
Term
| Short-Run equilibrium aggregate output |
|
Definition
| The quantity of aggregate output produced in the short-run macroeconomic equilibrium |
|
|
Term
|
Definition
| An event that shifts the short-run aggregate supply curve |
|
|
Term
|
Definition
| The combination of inflation and falling aggregate output |
|
|
Term
|
Definition
| An event that shifts the aggregate demand curve |
|
|
Term
| Long-Run macroeconomic equilibrium |
|
Definition
| The point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve |
|
|
Term
|
Definition
| When aggregate output is below potential output |
|
|
Term
|
Definition
| When aggregate output is above potential output |
|
|
Term
|
Definition
| Shocks to aggregate demand affect aggregate output in the short-run but not the long-run |
|
|
