The Cycle & The Curve
This is the technical term for the "bottom" of the business cycle.
What is a Trough?
This term refers to "current prices" and does not account for the fact that a dollar might buy less today than it did ten years ago.
What is Nominal?
These are the four components of Aggregate Demand.
What are Consumption, Investment, Government Spending, and Net Exports?
This is the difference between tax revenue and spending in a single year.
What is a Deficit?
This term describes consumption that happens even if your income is zero.
What is Autonomous Consumption?
To be in a technical recession, Real GDP must decline for this long.
What is two consecutive quarters/six months?
This is the specific term for "Inflation-Adjusted" GDP, which allows us to see if we actually produced more stuff or if prices just went up.
What is Real GDP?
Name the two axes on an ASAD graph.
What are Price Level (Y) and Real GDP (X)?
This is the total accumulation of all past annual deficits.
What is the National Debt?
This is the difference between Inflation and Expected Inflation
What is actual price rises vs. what people plan/contract for?
This range of the Aggregate Supply curve represents a deep recession where output can increase without raising prices.
What is the Horizontal/Keynesian range?
This economic tool acts like a "price thermometer" for the entire economy, measuring the price changes of all domestically produced final goods.
What is the GDP Deflator or Implicit Price Deflator?
If the economy has an "Inflationary Gap," the equilibrium is to the ______ of the LRAS.
What is the Right?
Spending on Social Security is an example of this type of "required" spending
What is Non-Discretionary/Mandatory spending?
When one person's spending becomes another person's income, we are looking at the ______ view of the multiplier.
What is the Micro view?
Explain the movement of a point on a PPF graph during a "Peak."
What is moving onto or slightly beyond the curve/frontier?
If a worker expects 3% inflation but the actual inflation is 10%, that worker is experiencing a gap between Inflation and ______ Inflation.
What is Expected?
To close a Recessionary Gap, the government should do this to taxes or spending.
What is decrease taxes or increase spending?
This group of people is primarily responsible for "paying" for the U.S. National Debt over time.
Who are current and future taxpayers?
This term describes the portion of an extra dollar of income that a person spends.
What is the Marginal Propensity to Consume/MPC?
List three of the "Five Facts" of the Business Cycle.
Fluctuations are irregular,
Real GDP measures them,
Investment is volatile,
Unemployment rises in recessions,
and they are unpredictable.
Explain why a "Real" value is more useful to an economist than a "Nominal" value when looking at history.
Because it removes the distortion of price changes/inflation to show actual volume/quantity.
This type of equilibrium occurs only where AD, SRAS, and LRAS all intersect at once.
What is Long-Run Equilibrium?
Roughly how much is the current U.S. National Debt?
What is over $34 Trillion?
If the government has a "Surplus," it means this.
What is Tax Revenue is greater than Government Spending?