Chapter 7 - The Classical Long-Run Model Questions

Chapter 7 - The Classical Long-Run Model Questions -...

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63 CHAPTER 7 THE CLASSICAL LONG-RUN MODEL SPEAKING ECONOMICS Fill in each blank with the appropriate word or phrase from the list provided in the word bank. (For a challenge, fill in as many blanks as you can without using the word bank.) _________________________ 1. A macroeconomic model that explains the long-run behavior of the economy. _________________________ 2. Adjustment of prices until quantities supplied and demanded are equal. _________________________ 3. A market in which land, labor, or capital are traded. _________________________ 4. Indicates how many people will want to work at various wage rates. _________________________ 5. Indicates how many workers firms will want to hire at various wage rates. _________________________ 6. The relationship showing how much total output can be produced with different quantities of labor, with land, capital, and technology held constant. _________________________ 7. The level of real GDP produced when the labor market clears. _________________________ 8. A diagram that shows how goods, resources, and dollar payments flow between households and firms. _________________________ 9. The idea that total spending will be sufficient to purchase the total output produced. _________________________ 10. Government tax revenues minus transfer payments. _________________________ 11. The portion of after-tax income that households do not spend on consumption goods. _________________________ 12. Income earned, but not spent, by households during a given year. _________________________ 13. Spending from sources other than households.
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64 CHAPTER 7 The Classical Long-Run Model _________________________ 14. A market in which households make their savings available to borrowers. _________________________ 15. The difference between government purchases and net taxes. _________________________ 16. Indicates the level of household saving at various interest rates _________________________ 17. Indicates the level of investment spending firms plan at various interest rates. _________________________ 18. Indicates the amount of government borrowing at various interest rates. _________________________ 19. Indicates the total amount of borrowing at various interest rates. _________________________ 20. The idea that the long-run price level depends on the supply of money. _________________________ 21. Government policies designed to change the level of spending in the economy. _________________________ 22. A change in government purchases or net taxes designed to change total spending and total output. _________________________ 23. A decline in one sector’s spending caused by an increase in some other sector’s spending. _________________________ 24. A dollar-for-dollar decline in one sector’s spending caused by an increase in some other sector’s spending. _________________________ 25. Manipulation of the money supply to achieve some macroeconomic goal. _________________________ 26. The idea that real variables and nominal variables are determined independently. Word Bank aggregate production function full-employment output budget deficit government demand for funds curve circular flow (household) saving classical dichotomy injections classical model investment demand curve complete crowding out labor demand curve crowding out labor supply curve demand management leakages fiscal policy loanable funds market
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CHAPTER 7 The Classical Long-Run Model 65 market clearing resource market monetary policy Say’s law net taxes supply of funds curve quantity theory total demand for funds curve CHAPTER HIGHLIGHTS Fill in the blanks with the appropriate words or phrases. If you have difficulty, review the chapter and then try again.
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