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Dynamic AD-AS Model: Introduction definitions

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Termini in questo insieme (15)

  • Dynamic AD-AS Model
    A framework where aggregate demand and supply curves shift over time, capturing ongoing economic growth and inflation.
  • Aggregate Demand
    Total spending on goods and services in an economy, influenced by population, income, and government expenditures.
  • Aggregate Supply
    Total output producers are willing to supply at various price levels, shifting with technological progress and labor force changes.
  • Long-Run Aggregate Supply
    Represents the economy's potential output at full employment, increasing as technology and population grow.
  • Short-Run Aggregate Supply
    Reflects current production capacity, adjusting rightward with improvements in technology and workforce expansion.
  • Potential GDP
    The highest sustainable output an economy can achieve when operating at full employment, rising with economic growth.
  • Equilibrium
    The point where aggregate demand and aggregate supply intersect, determining the economy's output and price level.
  • Consumer Price Index
    A measure tracking changes in the average price of a basket of goods and services over time.
  • Inflation
    A general increase in prices across the economy, commonly observed over the long term in most countries.
  • Recession
    A period of declining economic activity, often associated with reduced output and demand.
  • Technological Advancement
    Improvements in methods or tools that boost productivity and shift supply curves rightward.
  • Population Growth
    An increase in the number of people, leading to higher consumption, investment, and government spending.
  • Government Spending
    Expenditures by the public sector, which tend to rise as the population expands.
  • Investment
    Expenditures by businesses on capital goods, increasing as the economy grows and opportunities expand.
  • Price Level
    The average of current prices across the entire spectrum of goods and services produced in the economy.