Chapter 14 Vocabulary

Question 1

emphasize that all prices eventually adjust and the economy goes back to long-run equilibrium
- government out

Answer 1

classical economics

Question 2

see the return to the lung-run as a delayed an unpredictable adjustment
- sticky prices
- AD shift

Answer 2

Keynesian economics

Question 3

compromises the use go government’s budget tools
(government spending and taxes) to influence the macroeconomy

Answer 3

fiscal policy

Question 4

involves adjusting the money supply to influence the economy

Answer 4

monetary policy

Question 5

encompasses governmental acts that influence the direction of the overall economy

Answer 5

macroeconomic policy

Question 6

shifters
- decrease in AD
- rGDP plummeted

Answer 6

great depression

Question 7

shifters
- decrease in AD
- housing crash
- stock market crash
- financial sector down
- AS drops

Answer 7

great recession