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AP ECON - Chapter 30 Flashcards

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6423769676Aggregate demandThe total demand for goods and services over varying prices within the economy, including componenting such as household consumption, business investment, government spending & net exports., the amount of goods and services in the economy that will be purchased at all possible price levels0
6423769677Real balances effectAn increase (or decrease) in the price level decreases (or increases) the purchasing power of financial instruments, which in turn decreases (or increases) the aggregate quantity demanded1
6423769678Interest rate effectThe changes in household and business buying as the interest rate changes (in turn, a reflection of a change in the demand for or supply of credit brought on by price level changes)2
6423769679Foreign purchases effectinverse effect of domestic prices compared to foreign prices. If goods of foreign countries decrease in regard to domestic prices, net exports will decrease3
6423769680Determinants of aggregate demandFactors such as input prices, productivity, and the legal-institutional environment that, if they change, shift the aggregate supply curve4
6423769681Aggregate supplyThe total amount of goods and services in the economy available at all possible price levels5
6423769682Immediate short run aggregate supply curveA aggregate supply curve at which real output, but not the price level, changes when the aggregate demand curve shifts; a horizontal aggregate supply curve that implies an inflexible price level.6
6423769683Short run aggregate supply curveShows positive relationship between price level and RGDP - The higher the price, the more production of a good7
6423769684Long run aggregate supply curveThe level of real GDP is determined by the number of workers, the capital stock-including factories, office buildings, and machinery and equipment-and the available technology. Changes in price level don't affect this aggregate supply curve, making it vertical8
6423769685Determinates of aggregate supplyFactors that shifts the aggregate supply curve left or right- includes input prices, productivity, and legal-institutional environment9
6423769686ProductivityA measure of the amount of output based on the amount of inputs used10
6423769687Equilibrium price levelThe price level that equates aggregate supply and aggregate demand11
6423769688Equilibrium real outputThe gross domestic product at which the total quantity of final goods and services purchased (aggregate expenditures) is equal to the total quantity of final goods and services produced (the real domestic output); the real domestic output at which the aggregate demand curve intersects the aggregate supply curve12
6423769689Menu costsThe costs of changing prices13
6423769690Efficiency wagesWages that elicit maximum work effort and thus minimize labor costs per unit of output14
6423769691AD-AS model (aggregate demand- aggregate supply model)15

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