Aggregate Demand
These four components make up aggregate demand: consumption, investment, government spending, and this.
What is net exports?
The direction of shift of the aggregate supply curve that represents technological advancements.
What is a shift to the right (increase)?
When there is too much currency in circulation, so the value of money falls.
What is "inflation"?
This causes slower economic growth.
What is decreased government spending?
Keynesian economics recommends this to stabilize the business cycle
What is Government Intervention?
What does the aggregate demand curve show us the relationship between these.
What are output (real GDP) and price level?
The other group of factors that shift aggreggate supply curves (that we have talked about) : Costs of production, GST, labour force size and skills, and this one.
What is productivity?
The amount of money the Federal Reserve requires banks to keep in reserve.
What is the Reserve Requirement
The manner in which government regulates the economy to provide for the greater good.
What is regulatory policy?
This stage of the business cycle that displays increasing confidence in economy, increased spending and decreasing unemployment
What is recovery?
If consumer confidence increases and people spend more, aggregate demand does this.
What is a shift right (increase)?
In the short run, the aggregate supply curve slopes upward because of this.
What are sticky wages and prices?
Reserve Requirement, The Discount Rate, and Government Bonds.
What are the three tools the Federal Reserve uses to try and keep the economy stable?
What the president and congress use to control the economy via taxing and spending.
What is fiscal policy?
The stage of business cycle that decreases confidence in economy; reduces spending; increases unemployment
What is recession?
A type of policy used to increase aggregate demand, which includes a decrease in taxes or an increase in government spending.
What is expansionary fiscal policy?
This causes an increase in real gdp as well as an increase in inflation.
What is a rightward shift of the aggregate supply curve?
The interest rate the Federal Reserve charges on banks when they borrow money.
What is the Discount Rate?
This speeds up economic growth.
What is increased government spending?
This natural disaster helped prevent the business cycle from recovering from the Great Depression.
What is the Dust Bowl?
During an inflationary period, should expansionary or contractionary action be taken?
What is Contractionary?
This is where prices settle eventually with Aggregate Demand.
What is "Long Run Aggregate Supply"?
Actions the Federal Reserve takes to control the economy by promoting growth and contractions, and to control the money supply.
What is Monetary Policy?
These increase due to increased government spending
What are "Aggregate Demand" and "Prices?
Hayek differed from Keynes as he thought this should be done during the business cycle.
What is "Nothing" (leaving it alone)?