Jim Whitney Economics 101

The basic AD/AS Macro model: Recap

Select from the list of items in the box to fill in the blanks below (each item is used once):

  -Consumption (C) 
  -cyclical 
  -private sector conditions 
  -Exports (X) 
  -foreign sector conditions 
  -frictional 
  -GDP deflator 
  -government spending and tax policies 
  -credit market conditions
  -Government purchases (G) 
  -Imports (M)		   -international competitiveness effect 
  -Investment (I) 
  -nominal input prices 
  -policies affecting output efficiency 
  -profit effect 
  -real GDP (RGDP)
  -interest-rate effect 
  -resource availability 
  -structural 
  -technology 
  -wealth effect

 

1.  In the AD/AS diagram:
What does Y stand for? ____________
What does P stand for?  ____________
 
2.  At full employment, what type of unemployment = 0? ___________
What types remain?  ____________      ____________
 
3.  What are the spending components of AD?
       AD = ______ + ______ + ______ + (______ - ______)
 
4.  Name three reasons that AD slopes downward:
        __________________      __________________      __________________
 
5.  List four categories of items which shift AD when they change:
       __________________      __________________
       __________________      __________________
 
6.  What is the reason that SRAS slopes upward? __________________
 
7.  List three items which shift both SRAS and LRAS when they change:
       __________________      __________________      __________________
 
8.  Changes in what item causes SRAS to shift without shifting LRAS? __________________