Inflation
Fill in the blank (2 words): The ______ is a hypothetical set of consumer purchases of goods and services.
Market basket
Fill in the blank (4 words): The ________ is the increase in consumer spending when disposable income rises by $1.
Marginal propensity to consume (MPC)
Fill in the blank (2 words): The ________ curve shows the relationship between the aggregate price level and the quantity of output demanded.
Aggregate demand
Fill in the blank (2 words): The _______ curve shows the relationship between the aggregate price level and the quantity of output supplied.
Aggregate supply
The government increases spending on roads and bridges through President Biden's American Jobs Plan. This shifts the ________ curve __________.
Aggregate demand; right
Fill in the blank (3 words): The _______ is a measure of the overall level of prices in an economy.
Aggregate price level
Fill in the blank (2 words): A household's _______ is that household's income after paying taxes to the government and receiving transfer payments.
Disposable income
Fill in the blank (2 words): The ______ is the change in consumer spending caused by the altered purchasing power of consumers' assets.
Wealth effect
Fill in the blank (1 word): The dollar amount of any given wage paid is called the _____ wage.
Nominal
Fill in the blank (1 word): The combination of inflation and falling aggregate output is called _______.
Stagflation
Fill in the blank (3 words): The most widely used measure of the overall price level in the United States is the _______.
Consumer price index (CPI)
Fill in the blank (3 words): The ________ is the increase in household savings when disposable income rises by $1.
Marginal propensity to save (MPS)
Fill in the blank (3 words): The _____ is the change in investment and consumer spending caused by altered interest rates that result from changes in the demand for money.
Interest rate effect
Fill in the blank (1 word): The wage adjusted for inflation is called the _____ wage.
Real
A ship was temporarily stuck in the Suez Canal, raising commodity prices. This would shift the _______ curve ________.
SRAS; left
Fill in the blank (3 words): The ______ measures changes in the prices of goods and services purchased by producers.
Producer price index (PPI)
Changes in which of the following lead to shifts in the aggregate consumption function? List the letters if more than one answer applies.
a. Expected future disposable income
b. Aggregate wealth
c. Current disposable income
a and b
Fill in the blanks (1 word, 1 word): ____ policy is the use of government spending to stabilize the economy. ____ policy is the central bank's use of changes in the quantity of money or interest rate to stabilize the economy.
Fiscal; monetary
Which of the following would cause a rightward shift in the LRAS? List all letters if more than one applies.
a. Technological advancements
b. Increased consumer sentiment
c. Nominal wage decreases
d. Increased oil production
a
If your wage doubles at the same time as the consumer price index goes from 100 to 300, your real wage:
a. doubles
b. falls
c. increases
d. stays the same
e. cannot be determined
b. falls
The slope of a family's consumption function is equal to
a. The marginal propensity to consume
b. The tax rate
c. The rate of increase in household current disposable income
d. The inflation rate
a
Write down the basic equation of national income accounting.
GDP = C + I + G + X - IM
Slow, sticky
Write down the formula for the output gap.
Output gap = (Aggregate output - Potential output) / Potential output * 100