Econ Unit 3 Inflationary/Recessionary Gap
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6 Terms
1
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Capital Stock
Machinery and tools purchased by businesses that increase output.
*PPC shifts outward since producers can make more
*PPC shifts outward since producers can make more
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An increase in consumption or government or economic growth
only investment causes growth since firms increased heir capital stock.
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If consumer spending increases, what will happen in the short/long run?
In long run, wages/cost increase
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Inflationary Gap
Output is high and unemployment is less than the Natural Rate of Unemployment.
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Recessionary Gap
Output is low and unemployment is more than the Natural Rate of Unemployment.
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Stagflation
a period of slow economic growth and high unemployment while prices rise
Still considered recessionary Gap.
Still considered recessionary Gap.