Chapter 28 - Aggregate Supply and the Equilibrium Price Level Flashcards Preview

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Flashcards in Chapter 28 - Aggregate Supply and the Equilibrium Price Level Deck (9)
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1
Q

aggregate supply

A

The total supply of all goods and services in an economy.

2
Q
aggregate supply (AS)
curve
A

A graph that shows the relationship between the aggregate quantity of output supplied by all firms in an economy and the overall
price level.

3
Q

cost shock, or supply shock

A

A change in costs that shifts the short-run aggregate supply (AS) curve.

4
Q

equilibrium price level

A

The price level at which the aggregate demand and aggregate supply curves intersect.

5
Q

potential output, or potential GDP

A

The level of aggregate output that can be sustained in the long run without inflation.

6
Q

demand-pull inflation

A

Inflation that is initiated by an increase in aggregate demand.

7
Q

cost-push, or supply-side, inflation

A

Inflation caused by an increase in costs.

8
Q

stagflation

A

Occurs when output is falling at the same time that prices are rising.

9
Q

inflation targeting

A

When a monetary authority chooses its interest rate values with the aim of keeping the inflation rate within some specified band over some specified horizon.