________ fall, which stimulates the demand for investment goods.
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Real GDP
________ is the variable most commonly used to monitor short- run changes in the economy.
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overall price level
Changes in the ________ can temporarily mislead suppliers about what is happening in the individual markets in which they sell their output.
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real GDP falls
When __________ in a recession, personal income, corporate profits, consumer spending, investment spending, industrial production, retail sales, home sales, auto sales, etc.
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larger quantity of goods
The increase in consumer spending means a(n) ________ and services demanded.
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Consumers
________ are wealthier, which stimulates the demand for consumption goods.
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Stagflation
________- a period of falling output and rising prices.
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price level
A decrease in the ________ raises the real value of money and makes consumers wealthier, which in turn encourages them to spend more.
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Depression
________- a severe recession.
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Recession
________- a period of declining real incomes and rising unemployment.
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currency
The ________ depreciates, which stimulates the demand for net exports.
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business cycle
fluctuations in the economy.
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Nominal wages
________ are slow to adjust to changing economic conditions.
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Short run fluctuations
________ in output and the price level should be viewed as deviations from the continuing long- run trends of output growth and inflation.
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Interest-rate effect
The price level and investment
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interest rates
When a fall in the U.S. price level causes U.S. ________ to fall, the real value of the dollar declines in foreign exchange markets.
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Wealth effect
The price level and consumption
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interest rate
Conversely, a higher price level raises the ________, discourages investment spending, and decreases the quantity of goods and services demanded.
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