Macro Chapter 11 HW – Flashcards

If Keynes' law applies during economic contractions and Say's law applies during economic expansion, how will the three goals of macroeconomics be affected?

If the price level of what firms produce is rising across an economy, but the costs of production are constant, then:

___________________ happens when the economy is producing at its potential and unemployment is at the natural rate of unemployment.

In an AD/AS model, the point where the economy has excess capacity is called the:

Keynesian Zone

Neoclassical Zone

Intermediate Zone

In an AD/AS model:

When prices of outputs in an economy become sufficiently high causing production to exceed potential GDP, the resulting:

Due to inflationary pressures, the national income of households has been spread across a higher overall price base for goods and services. How will this affect be shown in an AD/ASAD/AS model?

The ____________ describes a situation where sufficient credit is available, but the economy experiences a reduction in consumption and investment.

Why is productivity growth considered to be the most important factor in the AD/ASAD/AS model?

Which of the following will have the greatest influence on the slope of the demand curve in a single market model?

As the aggregate price level in an economy rises, ____________________.

As the aggregate price level in an economy decreases

Aggregate demand curves slope downwards for each of the following reasons EXCEPT

In an AD/AS diagram, an increase in structural unemployment will:

Structural Unemployment

frictional unemployment.

When an economy's output increases and the price level decreases, the ________ curve has shifted to the ____________.

Whether the economy is in a recession is illustrated in the AD/AS model by how close the _____________________ is to the potential GDP line.

The _________________ means that a higher price level leads to lower real wealth.

Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for a house. After 5 years, what change in the economy would cause an increase in the purchasing power of the funds she has managed to save?

deflation

inflation

___________ are economists who generally emphasize the importance of aggregate supply in determining the size of the macroeconomy over the ____________.

Aggregate supply (AS) denotes the relationship between the ______________ that firms choose to produce and sell and the_____________, holding the price of inputs fixed.

The maximum quantity that an economy can produce, given its existing levels of labor, physical capital, technology, and institutions, is called:

_________ results when an economy experiences high unemployment and high inflation at the same time.

Say's Law argues that a given _______ must create an equivalent _______ somewhere else in the economy.

When the economy of a country is operating close to its full capacity:

cyclical unemployment

Potential GDP in the U.S. will be unaffected by ____________________.

Figure 1 Refer to the graph Figure 1 above. A government creating economic policy in these circumstances should be most concerned about:

The graph Figure 2 below reflects a significant increase in world oil prices. What will the impact on aggregate supply most likely lead to?

Figure 3 The graph Figure 3 above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result?

Look at table If input prices rise and AS shifts to the left by 2,000 units at each price level, what output level will equal the new equilibrium price?

Economic production has fallen to less than full potential due to inadequate incentives for firms to produce. The duration of this economic condition will likely be: