Macro Economics Chapter 10 Key Words Flashcards
aggregate demand curve (AD)
The curve that shows the level of real GDP purchased by households, businesses, government, and foreigners (net exports) at different possible price levels during a time period, ceteris paribus.
aggregate supply curve (AS)
The curve that shows the level of real GDP produced at different possible price levels during a time period, ceteris paribus.
classical range
The vertical segment of the aggregate supply curve, which represents an economy at full-employment output.
cost-push inflation
An increase in the general price level resulting from an increase in the cost of production that causes the aggregate supply curve to shift leftward.
demand-pull inflation
A rise in the general price level resulting from an excess of total spending (demand) caused by a rightward shift in the aggregate demand curve.
interest-rate effect
The impact on total spending (real GDP) caused by the direct relationship between the price level and the interest rate.
intermediate range
The rising segment of the aggregate supply curve, which represents an economy as it approaches full-employment output.
keynesian range
The horizontal segment of the aggregate supply curve, which represents an economy in a severe recession.
long-run aggregate supply curve (LRAS)
The curve that shows the level of real GDP produced at different possible price levels during a time period in which nominal incomes change by the same percentage as the price level changes.
net exports effect
The impact on total spending (real GDP) caused by the inverse relationship between the price level and the net exports of an economy.
real balances
The impact on total spending (real GDP) caused by the inverse relationship between the price level and the real value of financial assets with fixed nominal value.
short-run aggregate supply curve (SRAS)
The curve that shows the level of real GDP produced at different possible price levels during a time period in which nominal incomes do not change in response to changes in the price level.
stagflation
The condition that occurs when an economy experiences the twin maladies of high unemployment and rapid inflation simultaneously.
