Term
| aggregate demand-aggregate supply (AD-AS) model |
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Definition
| the macroeconomic model that uses aggregate demand and aggregate supply to determine and explain the price level and the real domestic output |
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Term
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Definition
| a schedule or curve that shows the total quantity of goods and services demanded (purchased) at different price levels |
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Term
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Definition
| the tendency for increaess 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 |
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Term
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Definition
| the tendency for increase 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) |
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Term
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Definition
| the inverse relationship between the net exports of an economy and its price level rleative to foreign price levels |
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Term
| determinants of aggregate demand |
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Definition
| factors such as conumption spending, investment, government spending, and net exports that, if they change, shift the aggregate demand curve |
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Term
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Definition
| a schedule or curve showing the total quantity of goods and services supplied (produced) at different price levels |
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Term
| immediate-short-run aggregate supply curve |
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Definition
| 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 |
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Term
| short-run aggregate supply curve |
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Definition
| 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 |
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Term
| long-run aggregate supply curve |
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Definition
| 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 |
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Term
| determinants of aggregate supply |
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Definition
| factors such as input prices, productivity, and the legal-institutaionl environment that, if they change, shift the aggregate supply curve |
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Term
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Definition
| a measure of average output or real output per unit of input |
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Term
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Definition
| the price level at which the aggregate demand curve intersects the aggregate supply curve |
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Term
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Definition
| the GDP at which the total quantity of final goods and services purchased (aggregate expenditures) is equal to the total quantity of final goods and services producted ( the real domestic output) ; the real domestic output at which the aggregate demand curve intersects the aggregate supply curve |
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Term
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Definition
| 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 |
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Term
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Definition
| a wage that minimizes wage costs per unit of output by encouraging greater effort or reducing turnover |
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