AD/AS Short run

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4 Terms

1
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recessionary

low inflation expectations mean workers take lower nominal wages

costs of production are lower

SRAS will shift rightward

price level down

real gap up

unemployment down (only natural)

2
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inflationary

increased inflation expectations means workers demand higher nominal wages

cost of production higher 

SRAS shift left

price level up

real gap down

unemployment up

3
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recessionary caused by

a decrease in consumer spending, investment spending,

government spending, and/or net export spending

4
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inflationary caused by 

an increase in consumer spending, investment spending,

government spending, and/or net export spending.