Aggregates
Phillips Curve
MPC & MPS
Short, Long, Bing, Bong
Things & Stuff
100
What are the shifters of the aggregate demand curve?
Consumer Spending, Investment Spending, Government Spending, & Net Exports
100
The curve describing the relationship between inflation and unemployment is called...
The Phillips Curve
100
if MPC is 0.75, MPS = ?
0.25
100
What is an advantage of automatic stabilizers in fiscal policy?
They go into effect (automatically) without the passage of any new legislation.
100
How does crowding out occur?
Higher interest rates decrease investment (as a result of government entering loan market).
200
What are the shifters of the aggregate supply curve?
resources cost/prices, actions of the government, productivity... and inflationary expectations
200
According to the short-run Phillips curve, an increase in inflation will accompany ????
A decrease in unemployment.
200
If the MPC is 0.66, what is the spending multiplier?
~3
200
What is the effect of the government running a budget deficit?
An increase in the national debt.
200
What are the two fiscal policy actions the government can use to fix a recessionary gap?
Increase government spending or decrease taxes.
300
The government administers new subsidies to the farming market... what will shift and which direction?
Aggregate Supply & shifts to the right.
300
If Aggregate demand increases FROM equilibrium in the short-run AD-AS model, what effect will this have on the short-run Phillips curve?
The equilibrium point on the short-run Phillips curve will move along the curve up and to the left (or inflation will increase & unemployment will decrease)
300
If consumption increases by $1,200 while disposable income increases by $3,600... what is the marginal propensity to save?
0.6666666
300
A decrease in real interest rates will cause what to shift which way?
Investment spending increases... so Aggregate Demand increases and shifts to the right.
300
(DOUBLE POINTS!!) When the price level in one country increases, the prices of imports from other countries become more expensive. At the same time, exports from the country whose price level rose becomes relatively more expensive... this whole process is known as the:
Foreign Trade Effect
400
If operating in the intermediate range of the aggregate supply curve, an increase in aggregate demand results in what changes to PL and rGDP?
Price Level increases & rGDP increases
400
A decrease in the aggregate supply on the AD-AS model will cause what to happen on the short-run Phillips curve graph?
An entire curve shift to the right on the short-run Phillips Curve.
400
In the Keynesian aggregate-expenditures model, if the MPC is 0.75 and gross investment increases by $6 billion, equilibrium GDP will increase by ???
$24 billion
400
A decrease in the wages and production cost will most likely cause the price level and real GDP to change HOW in the short-run?
Price Level decreases & Real GDP increases.
400
If the government focuses on using spending to close a recessionary gap, what does this do to the national debt and real interest rates?
USA goes into a budget deficit by pulling on loans. This increases the national debt. Loan market gets flooded and real interest rates go up. Investment will decrease.
500
First person to the board to draw a correctly labeled AD-AS model showing the shifting result of an increase in technology while there exists a simultaneous increase in investment spending. (original graph + shifts)
...
500
First person to the board to draw a correctly labeled Phillips Curve graph showing both short-run and long-run and that illustrates a given point, A, at the natural rate of 5%, another point, B, at a high unemployment rate of 8%, and another point, C, at a low unemployment rate of 2%.
...
500
If the government enacts two fiscal policy changes of increasing spending by $30 billion while also simultaneously increasing taxes by the same amount... what is the multiplier value of BOTH multipliers... AND what is the total change in GDP? (oh and MPC = 0.75)
spending multiplier is 4, tax multiplier is 3, total change is +$30 billion in GDP.
500
First person to the board to draw a correctly labeled graph of aggregate demand and supply showing the price level and real output for an economy that is currently operating below full employment level.
...
500
TRIPLE POINTS!!! Draw TWO graphs: the AD-AS Model & the Phillips Curve, both completely labeled and both showing the original graphs, then the resulting shifts as a result of stagflation... on both graphs.
...
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