Agg. Demand
What is Consumption?
In this time frame, economic variables are fully flexible
What is the Long-Run?
The increase in consumer spending when income rises by $1.
What is the marginal propensity to consume
An economy that is experiencing widespread decline for a significant period of time.
What is a recession?
The total amount of accumulated resources adjusted for inflation
What is Real Wealth?
A sudden increase in commodity prices will have this impact on the A-S curve
What is 1?
A macroeconomist would encourage this fiscal policy during a recession?
What is expansionary fiscal policy.
A negative demand shock will have this effect on price level.
What is negative?
This describes the relative inflexibility of wages in the short-run?
What is sticky wages?
The amount of money left for consumption after accounting for taxes and transfers.
What is disposable income?
The issue with stabilization polices related to the time-delays.
What is lag?
What is the Exchange Rate Effect?
What is macroeconomic equilibrium?
The amount of change in Real GDP with an increase in spending of $200 billion. MPC = .75
What is $800 billion.
What is stagflation?
The AD curve with shift this direction when the current productive physical capacity is relatively large.
The relationship, in the short-run, between unemployment and inflation?
What an inverse relationship?
The effect on Real GDP if taxes are reduced by $50 billion. Assume MPC = .9
What is $450 billion?
The government believes it should boost GDP by $300 billion by increasing spending. With an estimated MPC of .66, how much spending will the government need to do to achieve its goal?
What is $100 billion?