Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. aggregate demand curve; 2. contractionary fiscal policy; 1. aggregate demand curve; 2. contractionary fiscal policy; 3. cyclical unemployment; 4. disposable income;3. cyclical unemployment; 4. disposable income;

_____ unemployment resulting from the business cycle;_____ unemployment resulting from the business cycle;

_____ income plus _____ income plus government transfersgovernment transfers minus taxes; the total minus taxes; the total amount of amount of householdhousehold income available to spend on consumption and income available to spend on consumption and savingsaving

_____ _____ fiscal policyfiscal policy that reduces aggregate demand by decreasing that reduces aggregate demand by decreasing government purchases, increasing taxes, or decreasing transfers.government purchases, increasing taxes, or decreasing transfers.

_____ shows the relationship between the _____ shows the relationship between the aggregate price levelaggregate price level and the and the quantity of quantity of aggregate outputaggregate output demanded by demanded by households, businesseshouseholds, businesses, , the government, and the rest of the world.the government, and the rest of the world.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. aggregate demand curve; 2. contractionary fiscal policy; 1. aggregate demand curve; 2. contractionary fiscal policy; 3. cyclical unemployment; 4. disposable income;3. cyclical unemployment; 4. disposable income;

____33__ unemployment resulting from the business cycle;__ unemployment resulting from the business cycle;

____44__ income plus __ income plus government transfersgovernment transfers minus taxes; the total minus taxes; the total amount of amount of householdhousehold income available to spend on consumption and income available to spend on consumption and savingsaving

____22__ __ fiscal policyfiscal policy that reduces aggregate demand by decreasing that reduces aggregate demand by decreasing government purchases, increasing taxes, or decreasing transfers.government purchases, increasing taxes, or decreasing transfers.

____11__ shows the relationship between the __ shows the relationship between the aggregate price levelaggregate price level and the and the quantity of quantity of aggregate outputaggregate output demanded by demanded by households, businesseshouseholds, businesses, , the government, and the rest of the world.the government, and the rest of the world.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. expansionary fiscal policy; 2. fiscal policy; 3. GDP 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gapDeflator; 4. Inflationary gap;

_____ the use of taxes, government transfers, or government _____ the use of taxes, government transfers, or government purchases of goods and services to stabilize the economy. purchases of goods and services to stabilize the economy.

_____ _____ fiscal policyfiscal policy that increases aggregate demand by increasing that increases aggregate demand by increasing government purchases, decreasing taxes, or increasing transfers.government purchases, decreasing taxes, or increasing transfers.

_____ exists when aggregate output is above potential output._____ exists when aggregate output is above potential output.

_____ a price measure for a given year that is equal to 100 times _____ a price measure for a given year that is equal to 100 times the ratio of the ratio of nominal GDPnominal GDP to to real GDPreal GDP in that year. in that year.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. expansionary fiscal policy; 2. fiscal policy; 3. GDP 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gapDeflator; 4. Inflationary gap;

____22__ the use of taxes, government transfers, or government __ the use of taxes, government transfers, or government purchases of goods and services to stabilize the economy. purchases of goods and services to stabilize the economy.

____11__ __ fiscal policyfiscal policy that increases aggregate demand by increasing that increases aggregate demand by increasing government purchases, decreasing taxes, or increasing transfers.government purchases, decreasing taxes, or increasing transfers.

____44__ exists when aggregate output is above potential output.__ exists when aggregate output is above potential output.

____33__ a price measure for a given year that is equal to 100 times __ a price measure for a given year that is equal to 100 times the ratio of the ratio of nominal GDPnominal GDP to to real GDPreal GDP in that year. in that year.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. inflation rate; 2. investment spending; 3. monetary 1. inflation rate; 2. investment spending; 3. monetary policy; 4. stagflation;policy; 4. stagflation;

_____ the annual percent change in a price index—typically the _____ the annual percent change in a price index—typically the consumer price indexconsumer price index..

_____ spending on productive _____ spending on productive physical capitalphysical capital, such as , such as machinery and construction of structures, and on changes to machinery and construction of structures, and on changes to inventoriesinventories..

_____ the combination of _____ the combination of inflationinflation and falling and falling aggregate outputaggregate output

_____ _____ the central bank’s use of changes in the quantity of money the central bank’s use of changes in the quantity of money or the interest rate to stabilize the economy or the interest rate to stabilize the economy

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. inflation rate; 2. investment spending; 3. monetary 1. inflation rate; 2. investment spending; 3. monetary policy; 4. stagflation;policy; 4. stagflation;

____11__ the annual percent change in a price index—typically the __ the annual percent change in a price index—typically the consumer price indexconsumer price index..

____22__ spending on productive __ spending on productive physical capitalphysical capital, such as , such as machinery and construction of structures, and on changes to machinery and construction of structures, and on changes to inventoriesinventories..

____44__ the combination of __ the combination of inflationinflation and falling and falling aggregate outputaggregate output

____33__ __ the central bank’s use of changes in the quantity of money the central bank’s use of changes in the quantity of money or the interest rate to stabilize the economy or the interest rate to stabilize the economy

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. labor force; 2. labor force participation rate; 3. marginal 1. labor force; 2. labor force participation rate; 3. marginal propensity to consume; 4. marginal propensity to save;propensity to consume; 4. marginal propensity to save;

_____ the increase in household savings when disposable _____ the increase in household savings when disposable income rises by $1.income rises by $1.

_____ the increase in _____ the increase in consumer spendingconsumer spending when income rises by when income rises by $1.$1.

_____ the percentage of the population age 16 or older that is in _____ the percentage of the population age 16 or older that is in the the labor forcelabor force..

_____ the number of people who are either actively employed _____ the number of people who are either actively employed for pay or unemployed and actively looking for work;for pay or unemployed and actively looking for work;

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. labor force; 2. labor force participation rate; 3. marginal 1. labor force; 2. labor force participation rate; 3. marginal propensity to consume; 4. marginal propensity to save;propensity to consume; 4. marginal propensity to save;

____44__ the increase in household savings when disposable __ the increase in household savings when disposable income rises by $1.income rises by $1.

____33__ the increase in __ the increase in consumer spendingconsumer spending when income rises by when income rises by $1.$1.

____22__ the percentage of the population age 16 or older that is in __ the percentage of the population age 16 or older that is in the the labor forcelabor force..

____11__ the number of people who are either actively employed __ the number of people who are either actively employed for pay or unemployed and actively looking for work;for pay or unemployed and actively looking for work;

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. multiplier; 2. natural rate of unemployment; 3. nominal 1. multiplier; 2. natural rate of unemployment; 3. nominal GDP; 4. planned investment spending; GDP; 4. planned investment spending;

_____ the unemployment rate that arises from the effects of frictional _____ the unemployment rate that arises from the effects of frictional plus structural unemployment.plus structural unemployment.

_____ the value of all _____ the value of all final goods and servicesfinal goods and services produced in the produced in the economyeconomy during a given year, calculated using the prices current in during a given year, calculated using the prices current in the year in which the output is produced.the year in which the output is produced.

_____ the _____ the investment spendinginvestment spending that that firmsfirms intend to undertake during a intend to undertake during a given period.given period.

_____ the ratio of total change in _____ the ratio of total change in real GDPreal GDP caused by an caused by an autonomous autonomous change in aggregate spendingchange in aggregate spending to the size of that autonomous change. to the size of that autonomous change.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. multiplier; 2. natural rate of unemployment; 3. nominal 1. multiplier; 2. natural rate of unemployment; 3. nominal GDP; 4. planned investment spending; GDP; 4. planned investment spending;

____22__ the unemployment rate that arises from the effects of frictional __ the unemployment rate that arises from the effects of frictional plus structural unemployment.plus structural unemployment.

____33__ the value of all __ the value of all final goods and servicesfinal goods and services produced in the produced in the economyeconomy during a given year, calculated using the prices current in during a given year, calculated using the prices current in the year in which the output is produced.the year in which the output is produced.

____44__ the __ the investment spendinginvestment spending that that firmsfirms intend to undertake during a intend to undertake during a given period.given period.

____11__ the ratio of total change in __ the ratio of total change in real GDPreal GDP caused by an caused by an autonomous autonomous change in aggregate spendingchange in aggregate spending to the size of that autonomous change. to the size of that autonomous change.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. price index; 2. real GDP; 3. recessionary gap; 4. 1. price index; 2. real GDP; 3. recessionary gap; 4. unemployment rate;unemployment rate;

_____ exists when _____ exists when aggregate outputaggregate output is below is below potential outputpotential output..

_____ the percentage of the total number of people in the _____ the percentage of the total number of people in the labor forcelabor force who who are unemployed, calculated as are unemployed, calculated as unemploymentunemployment/(/(unemploymentunemployment + + employmentemployment). ).

_____ the total value of all _____ the total value of all final goods and servicesfinal goods and services produced in the produced in the economyeconomy during a given year, calculated using the prices of a selected during a given year, calculated using the prices of a selected base year.base year.

_____ a measure of the cost of purchasing a given _____ a measure of the cost of purchasing a given market basketmarket basket in a in a given year, where that cost is normalized so that it is equal to 100 in the given year, where that cost is normalized so that it is equal to 100 in the selected base year; selected base year;

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. price index; 2. real GDP; 3. recessionary gap; 4. 1. price index; 2. real GDP; 3. recessionary gap; 4. unemployment rate;unemployment rate;

____33__ exists when __ exists when aggregate outputaggregate output is below is below potential outputpotential output..

____44__ the percentage of the total number of people in the __ the percentage of the total number of people in the labor forcelabor force who who are unemployed, calculated as are unemployed, calculated as unemploymentunemployment/(/(unemploymentunemployment + + employmentemployment). ).

____22__ the total value of all __ the total value of all final goods and servicesfinal goods and services produced in the produced in the economyeconomy during a given year, calculated using the prices of a selected during a given year, calculated using the prices of a selected base year.base year.

____11__ a measure of the cost of purchasing a given __ a measure of the cost of purchasing a given market basketmarket basket in a in a given year, where that cost is normalized so that it is equal to 100 in the given year, where that cost is normalized so that it is equal to 100 in the selected base year; selected base year;

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. Government transfers; 2. intermediate goods and services; 3. net 1. Government transfers; 2. intermediate goods and services; 3. net exports; 4. underemployed;exports; 4. underemployed;

_____people who work part time because they cannot find full-time people who work part time because they cannot find full-time jobs.jobs.

_____payments by the government to individuals for which no _____payments by the government to individuals for which no good or service is provided in return.good or service is provided in return.

_____goods and services, bought from one _____goods and services, bought from one firmfirm by another firm, by another firm, that are inputs for production of that are inputs for production of final goods and servicesfinal goods and services..

_____the difference between the value of _____the difference between the value of exportsexports and the value of and the value of importsimports..

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4

1. Government transfers; 2. intermediate goods and services; 3. net 1. Government transfers; 2. intermediate goods and services; 3. net exports; 4. underemployed;exports; 4. underemployed;

__4__people who work part time because they cannot find full-time people who work part time because they cannot find full-time jobs.jobs.

____11__payments by the government to individuals for which no __payments by the government to individuals for which no good or service is provided in return.good or service is provided in return.

____22__goods and services, bought from one __goods and services, bought from one firmfirm by another firm, by another firm, that are inputs for production of that are inputs for production of final goods and servicesfinal goods and services..

____33__the difference between the value of __the difference between the value of exportsexports and the value of and the value of importsimports..

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 41. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate 1. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate supply curve; 4. automatic stabilizers;supply curve; 4. automatic stabilizers;

_____a graphical representation of the relationship between the _____a graphical representation of the relationship between the aggregate price levelaggregate price level and the quantity of and the quantity of aggregate outputaggregate output supplied if all supplied if all prices, including prices, including nominal wagesnominal wages, were fully flexible., were fully flexible.

__________fiscal policyfiscal policy that is the direct result of deliberate actions by policy that is the direct result of deliberate actions by policy makers rather than rules. makers rather than rules.

_____government spending and taxation rules that cause _____government spending and taxation rules that cause fiscal policyfiscal policy to to be necessarily expansionary when the be necessarily expansionary when the economyeconomy contracts and contracts and necessarily contractionary when the economy expands. necessarily contractionary when the economy expands.

__________ nominal wages nominal wages that are slow to fall even in the face of high that are slow to fall even in the face of high unemploymentunemployment and slow to rise even in the face of labor shortages. and slow to rise even in the face of labor shortages.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 41. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate 1. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate supply curve; 4. automatic stabilizers;supply curve; 4. automatic stabilizers;

____33__a graphical representation of the relationship between the __a graphical representation of the relationship between the aggregate price levelaggregate price level and the quantity of and the quantity of aggregate outputaggregate output supplied if all supplied if all prices, including prices, including nominal wagesnominal wages, were fully flexible., were fully flexible.

____22____fiscal policyfiscal policy that is the direct result of deliberate actions by policy that is the direct result of deliberate actions by policy makers rather than rules. makers rather than rules.

____44__government spending and taxation rules that cause __government spending and taxation rules that cause fiscal policyfiscal policy to to be necessarily expansionary when the be necessarily expansionary when the economyeconomy contracts and contracts and necessarily contractionary when the economy expands. necessarily contractionary when the economy expands.

____11____ nominal wages nominal wages that are slow to fall even in the face of high that are slow to fall even in the face of high unemploymentunemployment and slow to rise even in the face of labor shortages. and slow to rise even in the face of labor shortages.

Mr. Weiss

Vocabulary Review – Test 4 – Sections 3 & 4Vocabulary Review – Test 4 – Sections 3 & 4