The aggregate demand curve indicates the relationship between
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the general price level and the aggregate quantity of goods and services demanded.
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In the AD/AS model, the aggregate demand for goods and services is composed of the purchases made by
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consumers, investors, governments, and foreigners (net exports).
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Which of the following best characterizes the circular flow of income?
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Businesses buy resources from households, and households use their income to buy goods and services from businesses.
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The market that coordinates the exchange of productive inputs between the household and business sectors is the
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resource market.
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The short-run aggregate supply curve shows the relationship between
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the general level of prices and the quantity of goods and services that domestic firms will supply.
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Saving is
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after-tax income that is not spent on consumption.
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Which of the following equations is accurate?
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real interest rate = money interest rate − inflationary premium
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The supply of resources, level of technology, and the quality of an economy's institutional arrangements provide the constraint that determines the shape of the
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long-run aggregate supply curve.
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The actions of borrowers and lenders are coordinated by
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the interest rate in the loanable funds market.
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The real rate of interest is
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the money rate of interest adjusted for inflation.
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The exchange rate is
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the price of one currency in terms of another currency.
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The price of one country's currency in terms of another's is called
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the exchange rate.
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The real rate of interest equals the
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money rate of interest minus the expected inflation rate.
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The "loanable funds market" is a term used by economists to describe the
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market that coordinates the borrowing and lending of individuals and firms.
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In the context of aggregate supply, the long run is defined as the period during which
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individuals have sufficient time to modify their behavior in response to price changes.
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Monetary policy can be most accurately described as
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the deliberate control of the money supply to achieve macroeconomic goals.
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