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Unformatted text preview: -Fiscal policy – changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives.-Long-run Aggregate Supply Curve – a curve that shows the relationship in the long run between price level and the quantity of real GDP supplied-Short run aggregate curve shifts when Change in Labor Force or capital Stock Technological Change Expected Change in the future price level Adjustment of workers and firms to error in past expectation about the price level-Explanation to why short-run aggregate supply curve slopes upward are… Contracts make some wages and prices “sticky” Firms are often slow to adjust wages Menu cost - (The costs to firms of changing prices), make some prices sticky-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...
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This note was uploaded on 01/19/2012 for the course CIT 230 taught by Professor Staff during the Fall '08 term at Oakland University.
- Fall '08