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Quantity of Real GDP Supplied
Aggregate Supply
Long-Run Aggregate Supply
Short-Run Aggregate Supply
Short-Run Aggregate Supply (SRAS)
Long-Run Aggregate Supply (LRAS)
In the long run, real GDP ______ potential GDP
Why does aggregate supply equal potential GDP in the long run?
When potential GDP increases, both the LRAS and the SRAS curves shift _______
If the full-employment quantity of labour changes, the quantity of capital (physical or human) changes, or technology advances, the LRAS and SRAS curves shift ________
if there is a rise in the wage rate, the LRAS and SRAS curves shift ________
Quantity of real GDP demanded (Y)
Aggregate demand curve (AD)
The AD curve slopes downward for two main reasons
Wealth Effect
Intertemporal substitution effect
International substitution effect
Aggregate Demand Curve
The main influences on aggregate demand are
Expectations
Fiscal Policy
Monetary Policy
Fiscal Policy and Monetary Policy
The World Economy
An increase in Aggregate Demand shifts the curve _____
Aggregate Demand Increases If
An decrease in Aggregate Demand shifts the curve _____
Aggregate Demand Decreases If
Short-Run Macroeconomic Equilibrium
If real GDP is below equilibrium GDP, firms ______ production and _____ prices
If real GDP is above equilibrium GDP, firms ______ production and _______ prices
In short-run equilibrium, real GDP can be ______ potential GDP
Long-Run Macroeconomic Equilibrium
Long-run equilibrium occurs at the _____ of the AD, SRAS, and LRAS curves
If the quantity of labour grows, capital is accumulated, or technology advances, potential GDP increases. The LRAS curve shifts ______. GDP ______ and prices ______
Inflation in the Long-Run
The Business Cycle in the AS-AD Model
Below Full-Employment Equilibrium
Above Full-Employment Equilibrium
Full-Employment Equilibrium
Recessionary Gap
Inflationary Gap
An increase in aggregate demand shifts the aggregate demand curve ______
An increase in investment shifts the AE curve ______ and shifts the AD curve _____
When the price level rises, the AE curve shifts ______
At the short-run equilibrium, there is an __________ gap
In the long run, the multiplier is ______
A rise in the price level causes the SRAS curve to shift ______. Real GDP ______ and the price level ______ . This is called _______
3 Macroeconomic Schools of Thought
The Classical View
The Keynesian View
The Monetarist View
