3.1, 3.2, 3.3, 3.4 Vocab

Aggregate Demand

• The demand for all finished goods and services at various price levels in a given period of time

• The demand for finished goods and services at set price levels in a given period of time

• The desire willingness or ability to buy a good or service

• Total output of goods and services that exist in a period of time when production costs can be sonsidered fixed

Short-run Aggregate Supply

• The total output of goods and services that exist in a period of time when production costs can be considered fixed

• The timeframe when price levels, wages, and contracts an adjust to the changes in the economy

• The amount of goods and services business are willing to provide at any given price

• The demand for all finished goods and services at various price levels in a given period of time

Long-run Aggregate Supply

• The timeframe when price levels, wages, and contacts can adjust to the changes in the economy

• The timeframe when prices levels, wages and contracts do not adjust to the changes in the economy

• When nominal wages are slow to rise of fall in response to changes in the economy

• Level of real GDP if all prices an wages were fully flexible and efficient

• Marginal Propensity to Consume

• Marginal Propensity to Save

• Tax Multiplier

• Spending Multiplier

• Marginal Propensity to Consume

• Marginal Propensity to Save

• Tax Multiplier

• Spending Multiplier

Tax Multiplier

• How an increase in taxes impacts spending and GDP

• How spending is magnified in the economy

• Percentage of new income not used for consumption

Output Gap

• The difference between full-employment output and real GDP

• Maximum sustainable capacity

• The dollar amount paid to employees

• When prices for goods and services are fixed

The natural rate of unemployment can be defined as the

• unemployment rate consistent with accelerating inflation

• economy’s long-run equilibrium rate of unemployment

• labor force participation rate minus the unemployment rate

• unemployment rate of the least-skilled workers

• labor force participation rate plus the unemployment rate

The consumer price index measures which of the following?

• The change over time of the weighted prices of a particular group of goods and services

• The change over time of the difference between the gross domestic product deflator and the wholesale price index

• Inflation corrected for changes in the wholesale price index

• The change over time of the weighted wholesale price index

• Inflation corrected for changes in the real gross domestic product

Which of the following is the most fundamental issue that economics addresses?

• Choice of appropriate technology

• Reduction of unemployment

• Reduction of budget deficit

• Promotion of privatization

• Use of scarce resources