The total spending in our economy (AD =C + I + G + (X - M)
1 of 14
Aggregate Supply
The total quantity of goods and services produced in the economy
2 of 14
LRAS
Represents the productive capacity of the economy and reflects the quality and quantity of the four factors of production. Prices of resources are changing and all factors of production are variable
3 of 14
SRAS
At least one factor of production is fixed and the prices of resources are constant
4 of 14
Marginal Propensity to Withdraw
Shows the proportion of income that leaks from the circular flow (MPS + MPT + MPM)
5 of 14
Marginal Propensity to Save
the proportion of additional income that is saved
6 of 14
Marginal Propensity to Tax
the proportion of additional income that is taxed
7 of 14
Marginal Propensity to import
the proportion of additional income that is spent on imports
8 of 14
The Multiplier Effect
any change in a component of AD results in a greater final change in real GDP
9 of 14
Average Propensity to Consume
the proportion of income that households devote to consumer expenditure
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Marginal Propensity to Consume
proportion of addicitional income devoted to consumer expenditure
11 of 14
Real GDP
output measured at constant prices
12 of 14
Net Exports
(Exports - Imports) a component of aggregate demand
13 of 14
Natural Rate of Unemployment
The long run equilibrium position where an economy is at full employment
14 of 14
Other cards in this set
Card 2
Front
The total quantity of goods and services produced in the economy
Back
Aggregate Supply
Card 3
Front
Represents the productive capacity of the economy and reflects the quality and quantity of the four factors of production. Prices of resources are changing and all factors of production are variable
Back
Card 4
Front
At least one factor of production is fixed and the prices of resources are constant
Back
Card 5
Front
Shows the proportion of income that leaks from the circular flow (MPS + MPT + MPM)
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