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Cards In This Set
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Trade deficit
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If the value of a nation's imports exceeds exports, the nation has
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Changes in price have no effect on output in the long-run. in the long-run, the price of goods and the price of resources move together and firms have no incentive to change their output
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The long-run aggregate supply curve is vertical, reflecting the fact that
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In the short run, aggregate supply is sloped upward to the right, and in the long-run, it is vertical
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Which accurately indicated the relationship between the short-run and long-run aggregate supply curves?
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Above the economy's long-run capactiy
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If the current price level in the goods and services markert is higher than what was expected, output will be
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Export are greater than imports of goods and services
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A trade surpuls is when
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The demand for loanable funds will rise and the interest rate will rise
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Suppose business decision makers become more potimistic about furutre economic conditions and desire additional fudns to expand their plant capacity. What is the likely effect on the lonable funds market?
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A higher price level won't change the relationship between product and resource prices. In the long-run, once people have time to adjust their prior commitments fully, will compet forces and will restore the usuall relationship between them
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What is the difference between short-run equilibrium and long-run equilibrium in the goods and services market?
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Short: price rises, higher demand
long: things go back to normal |
Suppose that severe floods destroyed farms, homes, and businesses in the Midwest. Use the aggregates demand/aggregate supply model, to explain the changes you would expect to take place and the effects you would expect these floods on both output and prices(include both short-run and long-run effets)
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Short-prices would be lower
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In 2000, a major U.S. oil company began exploration off the southeaster coast of the United States. Suppose the company discovers huge reserves of natural gas. Using the aggregate demand/aggregate supply model, predict what shifts will occur and what will happen to output and prices in both the long and short runs.
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1.when inflation is low
2.when it is unpredictable 3.generally lenders usually benefit |
1. under what circumstances will inflation help borrowers at the expense of lenders?
2. under what circumstances will both partires be unaffected? 3. which scenario would you expect in the long-run? |
