Macro Test #4

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Author:
bclovett
ID:
29548
Filename:
Macro Test #4
Updated:
2010-08-10 16:03:13
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Macro
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Macro Test #4
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  1. An aggregate supply curve depicts the
    relationship between…
    The price level and the aggregate quantity supply.
  2. The long run aggrete supply curve has what
    kind of slope?
    Vertical
  3. What are the three ways that can increase LAS?
    • 1) Quantity of labor increases
    • 2) Quantity of capital increases
    • 3) Tech. advances
  4. What would technological progress do?
    Shift both the LAS and the SAS curve rightward.
  5. An increase in the money wage will do what?
    Decrease SAS
  6. What kind of slope does the aggregate demand curve have?
    Negative
  7. Along the demand curve a higher price is associated with…
    A decrease in the quantity of real GDP demanded.
  8. What is your real wealth measured by?
    The amount of goods and services your wealth will buy.
  9. An increase on Gov. Expenditures causes what?
    Increase aggregate demand.
  10. An increase in the quantity of money does what?
    Increases the aggregate demand curve.
  11. In the short run, macroeconomics equilibrium occurs when the quantity of real GDP demanded equals the quantity of real GDP supplied.
    In the short run, macroeconomics equilibrium occurs when the quantity of real GDP demanded equals the quantity of real GDP supplied.
  12. Where does full employment equilibrium occur?
    When real GDP equals potential GDP.
  13. In the long run macroeconomic equilibrium,
    Real GDP equals potential GDP.
  14. What does a recessionary gap mean?
    When short run economic equilibrium is less than full employment GDP.
  15. What does an inflationary gap mean?
    When short run economic equilibrium is more than full employment GDP.
  16. In the Keynesian Model, real GDP is measured by what?
    Level of aggregate demand.
  17. Disposable income is what?
    Income minus taxes plus transfer papers.
  18. What does the consumption function relates consumption
    expenditures to what?
    Disposable income.
  19. The graph of the consumption function has consumption
    expenditures on the vertical axis and on the horizontal axis.
    Disposable Income
  20. A movement along the consumption function is the result
    of changes in what?
    Disposable income.
  21. What is dissaving?
    • Households consume more than it receives in disposable income. (spends more than it
    • saves.)
  22. When the consumption function lays above the 45 degree
    line what are households doing?
    Dis-saving.
  23. What is marginal
    propensity to consume?
    Change in Consumption/ Change in disposable income.
  24. What is the marginal propensity to consume in other
    words?
    Change in Consumption/ Change in disposable income.
  25. Marginal propensity to save plus marginal propensity to
    consume what do you get?
    1.0 (equals one point zero.
  26. The graph on the aggregate expenditure curve has
    on the y-axis and on the x-axis.
    Aggregate plan expenditure, Real GDP
  27. What is the simple multiplier?
    1/1-mpc
  28. If MPC is .75 what is the multiplers?
    4.0
  29. Any change in the price level will result in what?
    Shift the AE and cause a movement along the AD curve.
  30. A fall in the price level shifts the AE curve and the equilibrium
    expenditure.
    Upward, Increases

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