Macroeconomics section 3.4 (Definitions)

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  • Created by: Amalie
  • Created on: 16-03-13 21:24
Demand-side policy
any government policy designed to influence the aggregate demand in the economy, thus affecting the average price level and real national output.
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Fiscal policy
a demand-side policy using changes in government spending and/or direct taxation to achieve economic objectives relating to inflation and unemployment.
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Monetary policy
a demand-side policy using changes in the money supply or interest rates to achieve economic objectives realting to inflation and unemployment.
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Aggregate supply
the total amount of domestic goods and services supplied by businesses and the government, including both consumer and capital goods.
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Short run aggregate supply (SRAS)
aggregate supply that varies with the level of demand for goods and services and that is shifted by changes in the costs of factors of production.
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Long run aggregate supply
aggregate supply that is dependent upon the resources in the economy and that can only be increased by improvements in the quantity and/or quality of factors of production.
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Supply-side policy
government policies designed to shift the long run aggregate supply curve to the right, thus increasing potential output it the economy.
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Multiplier
the ratio of an induced change in the level of national income to an original change in one or more of the injections into the circular flow of income (i.e. investment, government spending, or export revenue).
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Accelerator
the between relationship between the level of induced investment and the rate of change of national income.
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Crowding out
a situation where the government spends more (government expenditure) than it receives in revenue (mainly taxation), and needs to borrow money, forcing up interest rates and "crowding out" private investment and private consumption.
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Card 2

Front

a demand-side policy using changes in government spending and/or direct taxation to achieve economic objectives relating to inflation and unemployment.

Back

Fiscal policy

Card 3

Front

a demand-side policy using changes in the money supply or interest rates to achieve economic objectives realting to inflation and unemployment.

Back

Preview of the back of card 3

Card 4

Front

the total amount of domestic goods and services supplied by businesses and the government, including both consumer and capital goods.

Back

Preview of the back of card 4

Card 5

Front

aggregate supply that varies with the level of demand for goods and services and that is shifted by changes in the costs of factors of production.

Back

Preview of the back of card 5
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