Is the total amount of real output (real GDP) that consumers, firms, the government and foreigners want to buy at each possible price level, over a particular time period.
What is Aggregate Demand?
100
Is the total quantity of goods and services produced in an economy (real GDP) over a particular time period at different price levels.
What is aggregate supply?
100
LRAS curve is vertical at the full employment level of output, or potential GDP, indicating that in the long run the economy produces potential GDP, which is independent of the price level.
What does the monetarist/new classical model look like and why for the LRAS?
100
Real GDP is low, and the price level remains constant as the real GDP increases, there is a lot of unemployment and spare capacity
What is section 1 of a Keynesian AS curve?
100
increases of quantities of the factors of production, improvements in the quality of factors of production, improvements in technology, increases in efficiency, and institutional changes.
What are factors that change AS curves in the long run?
200
shows the relationship between the total amount of real output demanded by the four components and the economy's price level over a particular time period.
What is aggregate demand (AD) curve?
200
Shows the relationship between the price level and the quantity of real output (real GDP) produced by firms when resource prices (especially wages) do not change.
What is short-run aggregate supply curve (SRAS)?
200
Recessionary and inflationary gaps are eliminated in the long run.
Long-term growth in the business cycle diagram showing increases in potential output
What is a rightward shift in AS curves?
300
Changes in consumer confidence, changes in interest rates, changes in wealth, changes in personal income taxes, and changes in the level of household indebtedness.
What are some causes that shift AD having to deal with consumers?
What is equilibrium level of output for an AD-AS model?
300
Inflexible wages and prices mean that the economy cannot move into the long run.
What is the Keynesian model?
300
An economy can remain for long periods of time in an equilibrium where there is less than full employment, caused by insufficient aggregate demand
What is a Keynesian model of economics?
300
bad weather conditions for farming?
What affects SRAS and not LRAS?
400
Changes in business confidence, changes in interest rates, changes in business taxes, level of corporate indebtedness, and legal and institutional changes.
What are some causes of changes in investment spending that affect AD?
400
Is a situation where real GDP is less than potential GDP (and unemployment is greater than the natural rate of unemployment) due to insufficient aggregate demand