________ is commonly used to watch short- run changes in the economy.
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stickiness of wages
The ________ provides an incentive to produce less output (when the price level is lower) and more output (when the price level is higher)
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Stagflation
________: a period of falling outputs and rising prices.
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Technology
________ and monetary policy are the two most important influencers of the economy in practice.
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Policymakers
________ who can influence aggregate demand can navigate the adverse impact on output but only at the cost of making inflation worse.
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available technology
(In the long run): the real GDP depends on supplies of labor, capital, and natural resources and on the ________ used to produce goods and services.
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larger quantity of goods
The increase in consumer spending relates to a(n) ________ and services demanded.
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Misperceptions Theory
The ________: Changes in the overall price level can mislead suppliers about what actually occurs in certain markets where their products are sold.
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final goods
It measures the value of all ________ and services produced within a given period of time and measures the total income of everyone in the economy.
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Price Level
The ________ and Net Exports (The Exchange- Rate Effect): When a fall in the US ________ causes US interest rates to fall, the real value of the dollar declines in foreign exchange markets.
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Stagnation
________: falling output.
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Pessimism
________ about the future leads to falling incomes and rising unemployment.
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Money itself
________ is insignificant, but the effect that it has on everyone is The Reality of Short- Run Fluctuations.
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Technological Knowledge
Shifts Arising from ________: Better technology means more supplies produced.
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unemployment rate
The ________ is never 0 33- 2 Explaining Short- Run Economic Fluctuations The Assumptions of Classical Economics.
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Recession
________: a period of declining real incomes and rising unemployment.
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Depression
________: a severe recession.
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Quantity of output
________ supplied depends on the three theories: the sticky wage theory, the sticky price theory, and the misperceptions theory.
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Firms
________ produce a smaller amount of output.
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Shifts
________ Arising from Changes in Capital: An increase in capital stock increase productivity and supplies.
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Sticky Wage Theory
________: Wages are slow to change when economic conditions change.
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model of aggregate demand
The ________ and aggregate supply is commonly used among economists to explain short- run fluctuations.
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natural resources
Shifts in the long- run aggregate supply curve arise from changes in labor, capital, ________, or technological knowledge.
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Higher costs
________ lead to higher wages which mean higher prices, leading to a wage- price spiral.
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short run fluctuations
The ________ in output and the price level can be viewed as deviations from the long- run trends of output growth and inflation.
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Flashcard (75)