econ unit 18
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19 Terms
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 PLe stand for?
price level at equilibrium
What does ye stand for?
output of real GDP at equilibrium
If QSRAS > QAD then is the price level lower or higher than PLe?
higher
If QSRAS < QAD then is the price level lower or higher than PLe?
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 PLe?
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 PLe?
producers need to raise prices which will lower QAD and raise QSRAS