Term
| Aggregate demand and aggregate supply |
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Definition
| A model that explains short-run fluctuations in real GDP and the price level |
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Term
| Aggregate demand curve (AD) |
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Definition
| A curve that shows the relationship between the price level and the quantity of real GDP demanded by households, firms, and the government |
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Term
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Definition
| Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives |
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Term
| Long-run aggregate supply (LRAS) Curve |
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Definition
| A curve that shows the relationship in the long run between the price level and the quantity of real GDP supplied |
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Term
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Definition
| The costs to firms of changing prices |
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Term
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Definition
| The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives |
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Term
| Short-run aggregate supply (SRAS) curve |
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Definition
| A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms |
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Term
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Definition
| A combination of inflation and recession, usually resulting from a supply shock |
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Term
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Definition
| An unexpected event that causes the short-run aggregate supply curve to shift |
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Term
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Definition
| The name given to the widespread acceptance during the 1930s and 1940s of John Maynard Keynes's macroeconomic model |
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Definition
| The macroeconomic theories of Milton Friedman and his followers, particularly the idea that the quantity of money should be increased at a constant rate |
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Definition
| A plan for increasing the quantity of money at a fixed rate that does not respond to changes in economic conditions |
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Term
| New Classical macroeconomics |
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Definition
| The macroeconomic theories of Robert Lucas and others, particularly the idea that workers and firms have rational expectations |
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Term
| Real business cycle model |
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Definition
| A macroeconomic model that focuses on real, rather than monetary, causes of the business cycle |
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