Aggregate Demand
Economic Indicators
AS/AD
Fiscal Policy
Miscellaneous
100

The Determinants of Aggregate Demand

What are Consumption, Gov Spending, Investment, and Net Exports?
100

  • Which of the following is not included in GDP?
    A. Capital goods such as machinery

  • B. Imports
    C. the value of domestically produced services
    D. Government purchases of goods and services

  • E. The constructions of structures.

What is Imports? 

100
An event that shifts the aggregate demand curve
What is a demand shock
100
The Tax Multiplier

What is 

-MPC/MPS

100

An increase in taxes have this effect on aggregate demand. 

Decrease AD, shift it to the left. 

200

This is the period of recovery after an economic downturn.

What is Expansion?

200

This component makes up the largest percentage of GDP. 

What is Consumption? 

200

Exists when Aggregate output is above potential output.

What is an inflationary gap

200

Fraction of an additional dollar of disposable income that is saved is ....

What is Marginal Propensity to Save

200

The state of the economy when short run equilibrium is less than LRAS

Recessionary Gap

300

These points represent productive efficiency on the PPC graph. 

What are points that are ON THE LINE? 

300

Real GDP per capita is an imperfect measure of the quality of life in part because it doesn’t include

What is Expenditures on natural disasters? 

300

Percentage difference between actual aggregate output and potential output.

What is an output gap

300
MPC is 0.8 and government increases taxes by $50 million. What will occur to Real GDP?
What is decrease by 200 million.
300

It is during this period that the aggregate price level has no effect on the quantity of aggregate output. 

What is in the Long-Run? 

400

This is a sustained increase in real gross domestic product per capita over time and increases the economy’s ability to produce more goods and services over the long term. 

What is economic growth? 

400

This type of unemployment describes a person who is unemployed because of a mismatch between the quantity of labor supplied and the quantity of labor demanded. 

What is Structural Unemployment? 

400
When shocks to aggregate demand affect aggregate output in the short run, but not the long run.
What is self correcting
400
Government spending and taxation rules that cause fiscal policy to expand when the economy contracts and to contract when the economy expands.
What is automatic stabilizers.
400

If MPC is 0.5 and the government increases spending by $3 billion, this would be the change in real GDP. 

$6 billion

500

On the PPC graph, an increase in unemployment could be represented by a movement by

What moving from a point on the line to a point below the line? 

500

This is the inflation rate from 2012 to 2013.

Year   CPI

2012   229.6

2013   233.0

What is 1.5%? 

(233.0 − 229.6)/229.6 × 100 = 1.5%

500
When the aggregate output equals potential output.
What is Long Run Aggregate Supply
500
Change in government purchases of goods and services is $20 million that leads to an increase of $200 million in Real GDP. What is the multiplier?
What is 10
500

Progressive income taxes and unemployment are examples of this type of fiscal policy.  

What is non-discretionary or automatic stabilizers? 

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