Econ Vocab Chapters 11-15

Laissez-faire economics. Our economy, if left free from government interference, tends toward full employment. The prevalent school of economics from about 1800 to 1930.

• Saving Function

• Classical Economic System

• Classical Equilibrium

• Say's Law

Supply creates its own demand.

• Classical Equilibrium

• Classical Economic System

• Say's Law

• Aggregated Demand

Occurs when the market price is above the equilibrium price.

• Surplus

• Demand

• Supply

• Deficit

When aggregate demand is equal to aggregate supply, and we are at full employment.

• Interest Rate Effect

• Foreign Purchase Effect

• Classical Economic System

• Classical Equilibrium

Curve showing planned purchase rates for all goods and services in the economy at various price levels.

• Real Balance Effect

• Aggregate Demand Curve

• Aggregate Demand

• Interest Rate Effect

The sum of all expenditures for goods and services.

• Aggregate Demand Curve

• Classical Equilibrium

• Aggregate Supply

• Aggregate Demand

The influence a change in household purchasing power has on the quantity of real GDP that consumers are willing to buy.

• Foreign Purchase Effect

• Interest Rate Effect

• Real Balance Effect

• Aggregate Supply

A rising price level pushes up interest rates, which in turn lowers the consumption of certain goods and services and also lowers investment in plant and equipment.

• Classical Equilibrium

• Foreign Purchase Effort

• Real Balance Effect

• Interest Rate Effect

When our price level rises relative to the price levels in other countries, making American goods and services more expensive and causing our exports to decline.

• Real Balance Effect

• Foreign Purchase Effect

• Aggregate Supply

• Interest Rate Effect

The nation’s total output of goods and services.

• Aggregate Supply

• Aggregate Demand

• Aggregate Demand Curve

• Classical Equilibrium