Chapter 20 Key Terms Flashcards
(13 cards)
What is Aggregate Demand (AD)?
The total demand for goods and services within an economy at a given overall price level and in a given time period.
What is Aggregate Supply (AS)?
The total supply of goods and services that firms in an economy plan to sell during a specific time period.
What is Short-Run Aggregate Supply (SRAS)?
The aggregate supply curve that shows the relationship between the price level and the quantity of goods and services supplied in the short run.
What is Long-Run Aggregate Supply (LRAS)?
The aggregate supply curve that represents the relationship between the price level and the quantity of goods and services supplied when the economy is at full employment.
What is the Natural Level of Output?
The level of output that an economy can produce when operating at full capacity, without inflationary pressures.
What is Sticky-Wage Theory?
The theory that wages are slow to adjust to changes in labor market conditions, leading to unemployment in the short run.
What is Sticky-Price Theory?
The theory that prices of goods and services are slow to adjust to changes in supply and demand, causing short-term fluctuations in output.
What is Misperceptions Theory?
The theory that producers may misinterpret changes in price levels as changes in relative prices, leading to adjustments in output.
What is a Recession?
A period of economic decline characterized by falling GDP, rising unemployment, and decreasing consumer spending.
What is Stagflation?
An economic condition characterized by stagnant economic growth, high unemployment, and high inflation.
What is a Supply Shock?
An unexpected event that affects the supply of a product or commodity, leading to sudden changes in prices.
What is a Demand Shock?
An unexpected event that causes a sudden change in the demand for goods and services.
What is Long-Run Equilibrium?
A situation in which the quantity of goods and services supplied equals the quantity demanded, and all resources are fully employed.
