long-run AS curve
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a vertical AS curve that represents the idea that in the long run, output is
determined solely by the factors in production
marginal propensity to consume (MPC)
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the fraction of additional income thats spent
MPC= additional consumption/additional income
,If Table 11.3 represents all the investments available to the economy, the nominal
interest rate is 10%, and there is no inflation, what will be the level of investment in the
economy? (Note that the Cost represents the level of investment for each investment
project.)
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$100
Changes in taxes
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a decrease in taxes will increase AD and shift the demand curve to the right
Factors that decrease (left) AD
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increase in taxes, decrease in govt. spending, decrease in the money
supply
accelerator model
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, a model in which a downturn in real GDP leads to a sharp fall in investment,
which triggers further reductions in GDP thru the multiplier
bond prices rise
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interest rates fall
budget deficit
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amount by which govt, spending exceeds revenues in a given year
Factors that increase (right) AD
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decrease in taxes, increase in govt. spending, increase in the money supply
Wealth affect
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Give this one a try later!
a vertical AS curve that represents the idea that in the long run, output is
determined solely by the factors in production
marginal propensity to consume (MPC)
Give this one a try later!
the fraction of additional income thats spent
MPC= additional consumption/additional income
,If Table 11.3 represents all the investments available to the economy, the nominal
interest rate is 10%, and there is no inflation, what will be the level of investment in the
economy? (Note that the Cost represents the level of investment for each investment
project.)
Give this one a try later!
$100
Changes in taxes
Give this one a try later!
a decrease in taxes will increase AD and shift the demand curve to the right
Factors that decrease (left) AD
Give this one a try later!
increase in taxes, decrease in govt. spending, decrease in the money
supply
accelerator model
Give this one a try later!
, a model in which a downturn in real GDP leads to a sharp fall in investment,
which triggers further reductions in GDP thru the multiplier
bond prices rise
Give this one a try later!
interest rates fall
budget deficit
Give this one a try later!
amount by which govt, spending exceeds revenues in a given year
Factors that increase (right) AD
Give this one a try later!
decrease in taxes, increase in govt. spending, increase in the money supply
Wealth affect
Give this one a try later!
