3.5: Equilibrium in the AD-AS Model

0.0(0)
studied byStudied by 5 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/3

flashcard set

Earn XP

Description and Tags

Macroeconomics

Supply & Demand

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

4 Terms

1
New cards

Full employment

No cyclical unemployment and we are efficiently maximizing the use of resources. Maximum sustinable capatability. 4-6% unemployment

2
New cards

Inflationary gap/positive output gap

  • above/beyond full employment

  • output is high and unemployment is less that the NRU

  • Real GDP is greater than potential

<ul><li><p>above/beyond full employment</p></li><li><p>output is high and unemployment is less that the NRU</p></li><li><p>Real GDP is greater than potential</p></li></ul>
3
New cards

recessionary gap/negative output gap

  • output is low and unemployment is above NRU

  • Actual GDP is lower than potential GDP

  • Inefficient

<ul><li><p>output is low and unemployment is above NRU</p></li><li><p>Actual GDP is lower than potential GDP</p></li><li><p>Inefficient</p></li></ul>
4
New cards

economy at full employment output

knowt flashcard image

Explore top notes

Explore top flashcards