Eco 111 Exam 3 Study Guide
questions n answers rated A+
With higher Interest Rates... - correct answer ✔✔we as consumers save more and firms invest
less. Know what Says Law is (hint: supply creates its own demand).
Keynesian SRAS - correct answer ✔✔the horizontal portion of the aggregate supply curve in
which there is excessive unemployment and unused capacity in the economy.
SRAS - correct answer ✔✔The relationship between total planned economy wide production
and the price level in the short run, all other things held constant.
Recessionary Gap - correct answer ✔✔The gap that exists whenever equilibrium real GDP per
year is less than full employment GDP as shown by the position of the long run aggregate supply
curve.
Inflationary Gap - correct answer ✔✔The gap that exists whenever equilibrium real GDP per
year is greater than full employment real GDP, as shown by the position of the long run
aggregate supply curve.
Demand Pull Inflation - correct answer ✔✔Inflation caused by increases in aggregate demand
not matched by increases in aggregate supply.
Cost Push Inflation - correct answer ✔✔Inflation caused by decreases in short run aggregate
supply
MPC - correct answer ✔✔The ratio of the change in consumption to the change in disposable
income.
, MPS - correct answer ✔✔The ratio of the change in saving to the change in disposable income
APC - correct answer ✔✔Real consumption divided by real disposable income
APS - correct answer ✔✔Real saving divided by real disposable income.
Multiplier - correct answer ✔✔Th ratio of the change in the equilibrium level of real GDP to the
change in autonomous expenditures.
45 Degree Reference Line - correct answer ✔✔The line along which planned real expenditures
equal real GDP per year.
Transactions Approach - correct answer ✔✔A method of measuring the money supply by
looking at money as a medium of exchange.
Liquidity Approach - correct answer ✔✔A method of measuring the money supply by looking at
money as a temporary store of value.
Saving - correct answer ✔✔= disposable income - consumption
Dissaving - correct answer ✔✔that when you spend more than your disposable income it is
called
Graph Information - correct answer ✔✔. You will look at a graph and see where planned
consumption and planned income are equal. There will be another graph were you will see C
(consumption) and real disposable income and at the point where :consumption equals real
disposable income .
questions n answers rated A+
With higher Interest Rates... - correct answer ✔✔we as consumers save more and firms invest
less. Know what Says Law is (hint: supply creates its own demand).
Keynesian SRAS - correct answer ✔✔the horizontal portion of the aggregate supply curve in
which there is excessive unemployment and unused capacity in the economy.
SRAS - correct answer ✔✔The relationship between total planned economy wide production
and the price level in the short run, all other things held constant.
Recessionary Gap - correct answer ✔✔The gap that exists whenever equilibrium real GDP per
year is less than full employment GDP as shown by the position of the long run aggregate supply
curve.
Inflationary Gap - correct answer ✔✔The gap that exists whenever equilibrium real GDP per
year is greater than full employment real GDP, as shown by the position of the long run
aggregate supply curve.
Demand Pull Inflation - correct answer ✔✔Inflation caused by increases in aggregate demand
not matched by increases in aggregate supply.
Cost Push Inflation - correct answer ✔✔Inflation caused by decreases in short run aggregate
supply
MPC - correct answer ✔✔The ratio of the change in consumption to the change in disposable
income.
, MPS - correct answer ✔✔The ratio of the change in saving to the change in disposable income
APC - correct answer ✔✔Real consumption divided by real disposable income
APS - correct answer ✔✔Real saving divided by real disposable income.
Multiplier - correct answer ✔✔Th ratio of the change in the equilibrium level of real GDP to the
change in autonomous expenditures.
45 Degree Reference Line - correct answer ✔✔The line along which planned real expenditures
equal real GDP per year.
Transactions Approach - correct answer ✔✔A method of measuring the money supply by
looking at money as a medium of exchange.
Liquidity Approach - correct answer ✔✔A method of measuring the money supply by looking at
money as a temporary store of value.
Saving - correct answer ✔✔= disposable income - consumption
Dissaving - correct answer ✔✔that when you spend more than your disposable income it is
called
Graph Information - correct answer ✔✔. You will look at a graph and see where planned
consumption and planned income are equal. There will be another graph were you will see C
(consumption) and real disposable income and at the point where :consumption equals real
disposable income .
