Aggregate Suppl1 - contracts are made Factors of Production...

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Aggregate Supply Terms and Formulae Terms Adverse Supply Shocks - Economic changes that suddenly and drastically increase the cost of inputs and thus shift the aggregate supply curve to the left. Aggregate Demand - The total demand for goods and services in an economy. Aggregate Supply - The total supply of goods and services in an economy. AS-AD Model - The model of aggregate supply and aggregate demand that is used to evaluate the effects of economic policy decisions. Capital - Physical machines and human experience that lead to productivity. Capital Stock - The total amount of capital, both physical and human, that exists in an economy. Contractionary Policy - Monetary and fiscal policy that shifts the aggregate demand curve to the left. Expansionary Policy - Monetary and fiscal policy that shifts the aggregate demand curve to the right. Expected Price Level - The level of prices that firms believe will exist at the time that
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Unformatted text preview: contracts are made. Factors of Production - Refers to capital and labor, as these are the inputs that lead to productivity. Investment - Money spent on the improvement of the capital stock. Labor - Physical effort supplied by workers producing output. Labor Force - The total number of people working at the production of output. Labor Market - The market for workers where the demand for labor and the supply for labor are equilibrated by the wage. Menu Costs - The financial costs to firms of having to reprint menus, catalogues, and other price-listing materials in response to economic changes. Natural Rate of Output - The rate of output when the factors of production, capital and labor, are used at their normal rates. Nominal Wage - The amount of money paid to a worker in terms of actual currency, not purchasing power....
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