Unit 3 Flashcard Review 24-25

Front

The multiplier is useful in determining:

Back

change in GDP resulting from a change in spending

Front

Assume MPC .5. If government spending increases by $2 billion, GDP will increase by

Back

$4 billion

Front

If there is an initial increase in government spending into the economy, then the final increase in aggregate demand and real GDP will be greater. This reflects

Back

the multiplier effect

Front

The proportion of any change in income that is spent rather than saved is

Back

marginal propensity to consume

Front

The equation for the spending multiplier is:

Back

1/MPS

Front

All the following are shifters of Aggregate Supply except: Resource prices, Actions of the government, Productivity, Investment spending

Back

Investment spending

Front

What does the vertical axis represent on the aggregate demand curve?

Back

Price Level

Front

The intersection of the aggregate demand and aggregate supply curve occurs at the economy’s equilibrium level of: Nominal investment and the interest rate, Government taxes and employment, Real disposable income and unemployment, Real domestic output and the price level

Back

Real domestic output and the price level

Front

Changes in resources and technology shift which curve? Options: SRAS, AD, LRAS, Philips Curve

Back

LRAS

Front

In the long run: Wages and price flexibility has been achieved, so that the economy is at the natural level of employment and potential output.

Back

Wages and price flexibility has been achieved, so that the economy is at the natural level of employment and potential output.