Aggregate Supply
What is the AS shifter caused by an increase in price for domestic and imported resources?
Change in Resource Prices
What is the AD shifter caused by an increase in disposable income?
Change in Consumer Spending
What does aggregate supply mean?
Aggregate Supply is the amount of goods and services that firms will produce in an economy at different price levels?
What is Classical Theory?
A Change in AD will not change Output, even in the short run
Shows tradeoff between inflation and unemployment
What is the AS shifter caused by taxes on producers, and subsidies for domestic producers?
Change in Actions of the Government
What is the AD shifter caused by an increase in interest rate?
Change in Investment Spending
What is aggregate demand?
Aggregate Demand is all the goods and services that buyers are able and willing to purchase at different price levels
What is AS in classical theory? and what does it cause?
AS is vertical, so ad can't increase without causing inflation
In the short run, is there tradeoff between inflation and unemployment?
nah fam
What is the AS shifter caused by an increase in technology?
Change in Productivity
What is the AD shifter caused by a decrease in defense spending?
Change in Government Spending
What is the interest rate effect?
when price level increases lenders need to charge higher interest rates to get a real return on their loans
what is the classical range of AS?
Vertical at physical capacity
True or false: dolphins whistle to communicate?
True
What is the AS Shifters acronym?
R.
A.
P.
RAP
What is the AD shifter caused by exchange rates?
Change in Net Exports
What is the wealth effect?
Higher price levels reduce the purchasing power of money this decreases the quantity of expenditures
What is the intermediate range of Aggregate Supply?
Upward sloping bit of AD
What is the Whalens rap name?
Mr Beluga, or MDog
In the long run, will wages and resource prices increase or decrease as price levels increase?
They will INCREASE
What are the three causes for a downward sloping AD
1 - The Wealth Effect
2 - The Interest Rate Effect
3 - The Foreign Trade Effect
What is the foreign trade effect?
when US price levels rise, foreign buyers buy less American goods, and Americans buy more foreign goods
what is Keynesian theory?
A decrease in AD will lead to a persistent recession because prices of resources are NOT flexible
what is the name of our fire rap we just showed you?
Graphs messed up (Balanced)