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  1. M stands for
  2. V stands for
    Velocity of circulation
  3. P stands for
    Price level
  4. Disinflation
    When prices are rise but not as quick as they were
  5. Deflation
    when the general level of prices fall
  6. Q stands for
    real output what we can prouduce
  7. Real values
    is nominal values adjusted for the effects of change in the price level
  8. Nominal Values
    is the value in current year dollars ( the dollars at the time they were spent or earned)
  9. Aggregate Demand measured by
    C I G (X-Y)
  10. C I G (X-Y) stands for
    • consumption
    • investment
    • Govt spending
    • exports - imports
  11. Increase in money supply
    • means mor wages
    • prepared to buy more
    • prices rise as demand rise
    • inflation
  12. Cost push inflation is
    when producers have to pay more to produces there goods + services
  13. Cost push results in
    a decrease in aggregate supply this will cause the AS curve to shift to the left
  14. Aggreated supply will decrease when
    • rise in import raw materials
    • decrease in productivity
    • a rise in nominal wages
    • a rise in oil
    • depreciation in the exchange rate
  15. Demand pull is
    an increase in aggregate demand
  16. Demand pull results in
    • AD to shift right
    • increase in price level
  17. Consumtion spending increses if
    • income rises
    • income tax falls
    • interest rates fall
    • inflationary expectations increase
  18. Investment increase if
    • interrest rates fall
    • business confidence rises
  19. business confidence is
    when a company/ business expects sales to increase
  20. Goverment spending increase
    when they choose to spend more money
  21. exports increase when
    • the exchange rate falls
    • economic growth in out trading partners rise
  22. Imports fall when
    • when income in nz falls
    • the exchange rate falls
  23. Effects of inflation on firms/ business
    • increase in productivity
    • export less competitive
    • harder to reinvest
    • speculative rather than product investment
    • uncertainty in regard to planning and budgeting
  24. Effects on inflation on house holds
    • reduced purchasing power
    • discourages saving ( interest rates usually lower than inflation)
    • has unequal effects if on fixed income then may resive less money.
    • creates fiscal drag if people money rises due to inflation then purchasin power is remained but wages in higher tax brakets
    • borrowing¬†encouraged
  25. inflation of trade will....
    Quantity of g+ s will fall that we export because overseas buyer will purchase from other country's as cheaper this will create a fall in employment in export sector
Card Set:
2013-10-29 08:07:01

revise for test
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