AP Economics Ch 28 Vocab

21 terms by emilynicole93 

Create a new folder

Advertisement Upgrade to remove ads

Aggregate Demand and Aggregate Supply Chapter

Aggregate demand curve

shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world

Wealth effect of a change in the aggregate price level

effect on consumer spending caused by the effect of a change in the aggregate price level on the purchasing power of consumers' assets

interest rate effect of a change in the aggregate price level

effect on consumer spending and investment spending caused by the effect of a change in the aggregate price level on the purchasing power of consumers' and firms' money holdings

Aggregate supply curve

shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy

Nominal wage

dollar amount of the wage paid

Sticky wage

nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages

Short-run aggregate supply curve

shows the relationship between the aggregate price level and the quantity of aggregate output supplied that exists in the short run, the time period when many production costs can be taken as fixed

Long-run aggregate supply curve

shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible

Potential output

level of real GDP the economy would produce if all prices, including nominal wages, were fully flexible

AD-AS Model

the aggregate supply curve and the aggregate demand curve are used together to analyze economic fluctuations

Short-run macroeconomic equilibrium

when the quantity of aggregate output supplied is equal to the quantity demanded

short-run equilibrium aggregate output

the quantity of aggregate output produced in the short-run macroeconomic equilibrium

demand shock

event that shifts the aggregate demand curve

Supply shock

event that shifts the short-run aggregate supply curve

Stagflation

combination of inflation and falling aggregate output

Long-run Macroeconomic Equilibrium

when the point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve

Recessionary gap

when aggregate output is below potential output

Inflationary gap

when aggregate output is above potential output

Output gap

the percentage difference between actual aggregate output and potential output

Self-correcting

when shocks o aggregate demand affect aggregate output in the short run, but not the long run

Stabilization Policy

use of government policy to reduce the severity of recessions and rein in excessively strong expansions

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set