Macroeconomics Chapter 13

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Aggregate demand and aggregate supply model
A model that explains short-run fluctuations in real GDP and the price level
Aggregate demand (AD) curve
A curve that shows the relationship between the price level and the quantity of real GDP demanded by households, firms, and the government
Short-run aggregate supply (SRAS) curve
A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms
Monetary policy
The actions the Federal Reserve takes to manage the money supply and interest rates to achieve macroeconomic policy objectives
Fiscal policy
Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives
Long-run aggregate supply (LRAS) curve
A curve that shows the relationship in the long run between the price level and the quantity of real GDP supplied
Menu costs
The costs to firms of changing prices
Supply shock
An unexpected event that causes the short-run aggregate supply curve to shift
Stagflation
A combination of inflation and recession, usually resulting from a supply shock
Categories: Macroeconomics