Supply
What is the long-run aggregate supply?
The maximum sustainable output of an economy
What are the components of aggregate demand?
Consumption, Intestments, Government Spending, Net Exports
A tax cut is an example of this type of fiscal policy.
Expansionary fiscal policy
What is the most liquid form of assets in the U.S.?
What sport did Mr.O teach at Inderkum?
Golf
What happens to the resource cost, including labor costs, when in a recessionary gap?
Labor and resource costs go down
What happens to demand if supply shifts to the right?
It moves up along the demand curve
What effect does increasing government spending have?
It shift the aggregate demand curve to the right
What is the least liquid asset?
Real estate/housing
What is Mr.O's favorite movie?
Empire Strikes Back
More firms entering the market cause the market supply to do this.
Increase or Shift right
If the price of peanut butter increases, what happens to the demand for jelly?
The demand falls (complementary goods)
If the marginal propensity to consume is 0.75, what is the spending multiplier is this number?
4
If the bank has to keep 10% of deposits, how much would they need to keep if there were a $100 deposit?
$10
What is his son's name?
Alexander
The law of supply states that as the price of a good increases, the quantity supplied…
Increases
What happens to the demand curve when there is a change in the price of the product itself
Nothing changes/no shift/move along the curve
What is the purpose of a fiscal policy?
Manage fluctuation in the business cycle.
What do banks use deposits for?
To give out loans
What color hair did Mr.O used to have?
Brown
Why is the long-run aggregate supply curve vertical?
It is not responsive to the y-axis (price level)
What is the effect of aggregate demand if the government increases spending and taxes?
Indeterminate
500 billion dollar increase
This equation shows the money multiplier.
1/reserve requirements
What is Mr.O's favorite fast food?
Jack in the Box