Chapter 35: Extending the Analysis of Aggregate Supply
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Last updated 10:46 PM on 8/8/22
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22 Terms
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Central banks
________ engineer ongoing increases in the money supply in order to cause slightly faster continuous rightward shifts of the aggregate demand curve.
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Short run
Input prices are inflexible or totally fixed
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Long run
Input prices are fully flexible
4
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Phillips Curve
Suggests an inverse relationship between the rate of inflation and the rate of unemployment
5
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Stagflation
High inflation and high employment rates
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Aggregate supply shocks
Sudden, large increases in resource costs that jolt an economy’s short-run aggregate supply curve leftward
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Disinflation
Reductions in the inflation rate from year to year
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Supply side economics
Changes in aggregate supply are an active force in determining the levels of inflation, unemployment, and economic growth
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significant trade
There is no ________- off between inflation and unemployment over long periods of time.
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Laffer Curve
Depicts the relationship between tax rates and tax revenues
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aggregate demand
Increase in ________ → Increased price level and expanded real output.
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actual rate of inflation
When the ________ is higher than expected, profits temporarily rise and the unemployment rate temporarily falls.
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High tax rates
________ impede productivity growth and hence slow the expansion of long- run aggregate supply.
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demand pull inflation
In the short run, ________ drives up the price level and increases real output; in the long run, only the price level rises.
15
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Short run
Input prices are inflexible or totally fixed
16
New cards
Long run
Input prices are fully flexible
17
New cards
Phillips Curve
Suggests an inverse relationship between the rate of inflation and the rate of unemployment
18
New cards
Stagflation
High inflation and high employment rates
19
New cards
Aggregate supply shocks
Sudden, large increases in resource costs that jolt an economys short-run aggregate supply curve leftward
20
New cards
Disinflation
Reductions in the inflation rate from year to year
21
New cards
Supply side economics
Changes in aggregate supply are an active force in determining the levels of inflation, unemployment, and economic growth
22
New cards
Laffer Curve
Depicts the relationship between tax rates and tax revenues
Flashcards (105)