econ unit 18

What is the acronym to ensure a correctly labeled AD-AS graph?

What is the acronym to ensure a correctly labeled AD-AS graph?

ACE

What does the A in ACE stand for?

axes

What does the C in ACE stand for?

curves

What does the E in ACE stand for?

equilibrium points

What is the y-axis labeled in an AD-AS graph?

price level

What is the x-axis labeled in an AD-AS graph?

real GDP

What curve is downwards sloped on an AD-AS graph?

aggregate demand

What curve is upwards sloped on an AD-AS graph?

short run aggregate supply

What curve is vertically sloped on an AD-AS graph?

long run aggregate supply

Which way is an aggregate demand curve sloped?

downwards

Which way is a short run aggregate supply curve sloped?

upwards

What does PL_e stand for?

price level at equilibrium

What does y_e stand for?

output of real GDP at equilibrium

If QSRAS > QAD then is the price level lower or higher than PL_e?

higher

If QSRAS < QAD then is the price level lower or higher than PL_e?

lower

What does QAD stand for?

quantity aggregate demand

What does QSRAS stand for?

quantity short run aggregate supply

How will market forces correct to equilibrium if the price level is higher than PL_e?

producers need to lower prices which will lower QSRAS and raise QAD

How will market forces correct to equilibrium if the price level is lower than PL_e?

producers need to raise prices which will lower QAD and raise QSRAS