Principles of Macroeconomics, Chapter 13

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aggregate supply
the total supply of all goods and services in an economy
aggregate supply (AS) curve
a graph that shows the relationship between the aggregate quantity of output supplied by all firms in an economy and the overall price level
cost shock (supply shock)
a change in costs that shifts the short run AS curve
equilibrium price level
the price level at which AS and AD curves intersect
potential GDP (potential output)
the level of aggregate output that can be sustained in the long run without inflation
demand-pull inflation
inflation that is initiated by an increase in aggregate demand
cost-push inflation (supply-side inflation)
inflation caused by an increase in costs
occurs when output is falling at the same time that prices are rising
Categories: Macroeconomics