DeflateGate
A gap that exists when real GDP
exceeds potential GDP and that
brings a rising price level.
Inflationary Gap
______ is the relationship between the quantity of real GDP supplied and the price level when all other influences on production plans remain the same. This relationship can be described as follows: Other things remaining the same, the higher the price level, the greater is the quantity of real GDP supplied, and the lower the price level, the smaller is the quantity of real GDP supplied.
Aggregate Supply
____ is the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. This relationship can be described as follows: Other things remaining the same, the higher the price level, the smaller is the quantity of real GDP demanded; and the lower the price level, the greater is the quantity of real GDP demanded.
Aggregate demand
______ occurs when the quantity of real GDP demanded equals the quantity of real GDP supplied at the point of intersection of the AD curve and the AS curve.
Macroeconomic equilibrium
Who is the Secretary of the Treasury?
Janet Yellen
A gap that exists when potential GDP
exceeds real GDP and that brings a
falling price level.
Recessionary Gap
This determinant of AS could be increasing energy prices.
Input Prices
Y=CIGNX, what does Y stand for?
real-GDP
___ results from fluctuations in aggregate supply and aggregate demand. Aggregate supply fluctuates because labor productivity grows at a variable pace, which brings fluctuations in the growth rate of potential GDP. The resulting effect is called a ______. But aggregate demand fluctuations are the main source of the_____. The key reason is that the swings in aggregate demand occur more quickly than changes in the money wage rate that change aggregate supply. The result is that the economy swings from inflationary gap to full employment to recessionary gap and back again.
The real business cycle
Who is the Chairman of the Federal Reserve?
Inflation that begins with an increase in cost is called ____. The two main sources of cost increases are increases in the money wage rate and increases in the money prices of raw materials such as oil.
Cost-push inflation
If a government increases emission restrictions on businesses which determinant category would this fall under?
Regulations
A federal infrastructure package would be most associated with which determinant of CIGNX?
The government can use _____ — changing taxes, transfer payments, and government expenditure on goods and services—to influence aggregate demand and aggregate supply.
Fiscal Policy
During the 2008 recession list at least one fiscal and one monetary policy we used to close the recessionary gap.
QE, interest rates decrease, stimulus checks, infrastructure packages.
Inflation that starts because aggregate demand increases is called _____. ______ can be kicked off by any of the factors that change aggregate demand but the only thing that can sustain it is growth in the quantity of money.
Demand-Pull Inflation
Eureka! New investments in education have improved human capital and employees are more efficient. Which determinant of AS is affected?
Productivity
NX
The Federal Reserve can use _____— changing the quantity of money and the interest rate—to influence aggregate demand and aggregate supply.
Monetary Policy
Between 2021-2023 list at least one monetary policy we used to close the inflationary gap.
Increased interest rates
The combination of a decreasing real GDP and a rising price level is called ___. You can see that ____ poses a dilemma for the Fed. If the Fed does not respond when producers raise the oil price, the economy remains below full employment. If the Fed increases the quantity of money to restore full employment, it invites another oil price hike that will call forth yet a further increase in the quantity of money.
Stagflation
Companies are looking at future prices and deciding to change supply. Which determinant is implicated?
Expectations of future inflation or prices
Capital stock is most associated with which determinant in CIGNX?
I
This occurs—when equilibrium real GDP equals potential GDP—occurs where the AD curve intersects the aggregate supply curve AS*.
Full-employment equilibrium or LRAS/AS/AD equilibrium
Mr. Rusk's tangents of the day:
What trend in China happened for the first time in fifty plus years?
We hit the lowest unemployment rate since what year?
As of this month in 2023 what country is expected to have the world's largest population?
Negative population growth, 1969, or India