Since then, actual GDP has paralleled the potential GDP series forecast made by economists back in 2007—but, of course, along a considerably lower level path. -trying to guess and change not based on all knowledge-federal gov expenditures are greater than tax revenue-if the federal government's expenditures are less than its tax revenuea decline in private expenditures as a result of an increase in government purchasesUltimately raises the equilibrium interest rates and shifts the demand curve to the right.-The effect of a permanent increase in government spending is complete crowding out-involves increasing gov purchases or decreasing taxes-involves decreasing gov purchases or increasing taxesThe series of induced increases in consumption spending that results from an initial cause in autonomous expendituresChange in equilibrium GDP/ Change in government purchases-decreasing marginal income tax rates will increase the quantity of labor supplied, cutting the corporate income tax will increase spendingdifficult to get things passed and when they are, it takes time and poorly timed fiscal policy can do more harm than goodfluctuations in "real" factors, particularly technology shocks explain the deviation of real GDP from its potential levelvalue of final goods & services evaluated at base-year pricesThe value of final goods & services evaluated at current-year pricesIf workers & firms have rational expectations they form their expectations using...?negative slope because an increase in the interest rate decreases the quantity of money demandedselling Treasury bills which decrease the bank reservessince 2000 the Fed uses the __________ to measure inflationThe interest rate banks charge each other for overnight loans.
It assumes that an economy has achieved full employment and that aggregate demand does not exceed aggregate supply. The rate is determined by the supply of the reserves relative to the demand for them.The level of real GDP attained when al firms are producing at capacity Capa city here refers to “normal” hours and a “normal” sized workforce. The chart shows logged values of actual GDP and two estimates of potential GDP calculated by the CBO. How do increases in spending on the war in Afghanistan affect the aggregate demand curve?They will shift the aggregate demand curve to the rightThe level of aggregate supply in the long run is NOT affected byThe long-run aggregate supply shows the relationship between the ____________ and _____________Aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve_________ of unemployment during _______ make it easier for workers to ____________ wagesWhen the price of oil rises unexpectedly, the equilibrium price level _________ and the unemployment rate__________ in the short runAfter an unexpected _________ in the price of oil, the long-run adjustment decreases the price level and _________ the unemployment rate as they return to their original levelsA decrease in aggregate demand results in a ______ in the _______Government spending and taxes that automatically increase or decrease along with the business cycleThe increase in the amount that the government collects in taxes when the economy expands and the decrease in the amount that the government collects in taxes when the economy goes into a recession is an example ofAn increase in government purchases will increase aggregate demand becausseGovernment expenditures are a component of aggregate demandWhich of the following is an appropriate discretionary fiscal policy if equilibrium real GDP falls below potential real GDP? 2) the level of gdp attained by the country with the highest growth in real gdp in a given year.