Chapter 12 Terms Aggregate Demand and Aggregate Supply Flashcards
These are terms from Chapter 12 Aggregate Demand and Aggregate Supply, from the book Macroeconomics 18th edition by McConnel, Brue, and Flynn.
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| 164110077 | Aggregate demand-aggregate supply (AD-AS) model | The macroeconomic model that uses aggregate demand and aggregate supply to determine and explain the price level and the real domestic output. | |
| 164110078 | Aggregate demand | A schedule or curve that shows the total quantity of goods and services demanded (purchased) at different price levels. | |
| 164110079 | Real-balances effect | The tendency for increases in the price level to lower the real value (or purchasing power) of financial assets with fixed money value and, as a result, to reduce total spending and real output, and conversely for decreases in the price level. | |
| 164110080 | Interest-rate effect | The tendency for increases in the price level to increase the demand for money, raise interest rates, and, as a result, reduce total spending and real output in the economy (and the reverse for price-level decreases). | |
| 164110081 | Foreign purchases effect | The inverse relationship between the net exports of an economy and its price level relative to foreign price levels. | |
| 164110082 | Determinants of aggregate demand | Factors such as consumption spending, investment, government spending, and net exports that, if they change, shift the aggregate demand curve. | |
| 164110083 | Aggregate supply | A schedule or curve showing the total quantity of goods and services supplied (produced) at different price levels. | |
| 164110084 | Immediate-short-run aggregate supply curve | An aggregate supply curve for which real output, but not the price level, changes when the aggregate demand curves shifts; a horizontal aggregate supply curve that implies an inflexible price level. | |
| 164110085 | Short-run aggregate supply curve | An aggregate supply curve relevant to a time period in which input prices (particularly nominal wages) do not change in response to changes in the price level. | |
| 164110086 | Long-run aggregate supply curve | The aggregate supply curve associated with a time period in which input prices (especially nominal wages) are fully responsive to changes in the price level. | |
| 164110087 | Determinants of aggregate supply | Factors such as input prices, productivity, and the legal-institutional environment that, if they change, shift the aggregate supply curve. | |
| 164110088 | Productivity | A measure of average output or real output per unit of input. For example, the productivity of labor is determined by dividing real output by hours of work. | |
| 164110089 | Equilibrium price level | The price level at which the aggregate demand curve intersects the aggregate supply curve. | |
| 164110090 | Equilibrium real output | The 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 curve. | |
| 164110091 | Menu costs | The reluctance of firms to cut prices during recessions (that they think will be short lived) because of the costs of altering and communicating their price reductions; named after the cost associated with printing new menus at restaurants. | |
| 164110092 | Efficiency wages | A wage that minimizes wage costs per unit of output by encouraging greater effort or reducing turnover. |