| A | B |
|---|
| short run | In macroeconomic analysis, a period in which wages and some other prices are sticky and do not respond to changes in economic conditions. |
| expansionary policy | A stabilization policy designed to increase real GDP. |
| sticky price | A price that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus. |
| multiplier | The ratio of the change in the quantity of real GDP demanded at each price level to the initial change in one or more components of aggregate demand that produced it. |
| international trade effect | The tendency for a change in the price level to affect net exports. |
| inflationary gap | The gap between the level of real GDP and potential output, when real GDP is greater than potential. |
| nonintervention policy | A policy choice to take no action to try to close a recessionary or an inflationary gap, but to allow the economy to adjust on its own to its potential output. |
| interest rate effect | The tendency for a change in the price level to affect the interest rate and thus to affect the quantity of investment demanded. |
| wealth effect | The tendency for a change in the price level to affect real wealth and thus alter consumption. |
| stabilization policy | A policy in which the government or central bank acts to move the economy to its potential output. |
| change in short-run aggregate supply | A change in the aggregate quantity of goods and services supplied at every price level in the short run. |
| contractionary policy | A stabilization policy designed to reduce real GDP. |
| recessionary gap | The gap between the level of real GDP and potential output, when real GDP is less than potential. |
| exchange rate | The price of a currency in terms of another currency or currencies. |
| change in the aggregate quantity of goods and services | Movement along an aggregate demand curve. |
| aggregate demand | The relationship between the total quantity of goods and services demanded (from all the four sources of demand) and the price level, all other determinants of spending unchanged. |
| change in aggregate demand | Change in the aggregate quantity of goods and services demanded at every price level. |
| aggregate demand curve | A graphical representation of aggregate demand. |
| long run | In macroeconomic analysis, a period in which wages and prices are flexible. |
| short-run aggregate supply (SRAS) curve | A graphical representation of the relationship between production and the price level in the short run. |
| change in short-run aggregate supply | A change in the aggregate quantity of goods and services supplied at every price level in the short run. |
| long-run aggregate supply (LRAS) curve | A graphical representation that relates the level of output produced by firms to the price level in the long run. |
| monetary policy | The use of central bank policies to influence the level of economic activity. |
| recessionary gap | The gap between the level of real GDP and potential output, when real GDP is less than potential. |
| fiscal policy | The use of government purchases, transfer payments, and taxes to influence the level of economic activity. |
| productivity | The amount of output per worker. |
| output per capita | Real GDP per person. |
