2. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. aggregate demand curve; 2. contractionary fiscal policy; 3. cyclical unemployment; 4. disposable income; _____ unemployment resulting from the business cycle; _____ income plus government transfers minus taxes; the total amount of household income available to spend on consumption and saving _____ fiscal policy that reduces aggregate demand by decreasing government purchases, increasing taxes, or decreasing transfers. _____ shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world.

3. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. aggregate demand curve; 2. contractionary fiscal policy; 3. cyclical unemployment; 4. disposable income; __3__ unemployment resulting from the business cycle; __4__ income plus government transfers minus taxes; the total amount of household income available to spend on consumption and saving __2__ fiscal policy that reduces aggregate demand by decreasing government purchases, increasing taxes, or decreasing transfers. __1__ shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, the government, and the rest of the world.

4. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gap 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gap; _____ the use of taxes, government transfers, or government purchases of goods and services to stabilize the economy. _____ fiscal policy that increases aggregate demand by increasing government purchases, decreasing taxes, or increasing transfers. _____ exists when aggregate output is above potential output. _____ a price measure for a given year that is equal to 100 times the ratio of nominal GDP to real GDP in that year.

5. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gap 1. expansionary fiscal policy; 2. fiscal policy; 3. GDP Deflator; 4. Inflationary gap; __2__ the use of taxes, government transfers, or government purchases of goods and services to stabilize the economy. __1__ fiscal policy that increases aggregate demand by increasing government purchases, decreasing taxes, or increasing transfers. __4__ exists when aggregate output is above potential output. __3__ a price measure for a given year that is equal to 100 times the ratio of nominal GDP to real GDP in that year.

6. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. inflation rate; 2. investment spending; 3. monetary policy; 4. stagflation; _____ the annual percent change in a price index—typically the consumer price index. _____ spending on productive physical capital, such as machinery and construction of structures, and on changes to inventories. _____ the combination of inflation and falling aggregate output _____ the central bank’s use of changes in the quantity of money or the interest rate to stabilize the economy

7. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. inflation rate; 2. investment spending; 3. monetary policy; 4. stagflation; __1__ the annual percent change in a price index—typically the consumer price index. __2__ spending on productive physical capital, such as machinery and construction of structures, and on changes to inventories. __4__ the combination of inflation and falling aggregate output __3__ the central bank’s use of changes in the quantity of money or the interest rate to stabilize the economy

8. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. labor force; 2. labor force participation rate; 3. marginal propensity to consume; 4. marginal propensity to save; _____ the increase in household savings when disposable income rises by $1. _____ the increase in consumer spending when income rises by $1. _____ the percentage of the population age 16 or older that is in the labor force. _____ the number of people who are either actively employed for pay or unemployed and actively looking for work;

9. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. labor force; 2. labor force participation rate; 3. marginal propensity to consume; 4. marginal propensity to save; __4__ the increase in household savings when disposable income rises by $1. __3__ the increase in consumer spending when income rises by $1. __2__ the percentage of the population age 16 or older that is in the labor force. __1__ the number of people who are either actively employed for pay or unemployed and actively looking for work;

10. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. multiplier; 2. natural rate of unemployment; 3. nominal GDP; 4. planned investment spending; _____ the unemployment rate that arises from the effects of frictional plus structural unemployment. _____ the value of all final goods and services produced in the economy during a given year, calculated using the prices current in the year in which the output is produced. _____ the investment spending that firms intend to undertake during a given period. _____ the ratio of total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change.

11. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. multiplier; 2. natural rate of unemployment; 3. nominal GDP; 4. planned investment spending; __2__ the unemployment rate that arises from the effects of frictional plus structural unemployment. __3__ the value of all final goods and services produced in the economy during a given year, calculated using the prices current in the year in which the output is produced. __4__ the investment spending that firms intend to undertake during a given period. __1__ the ratio of total change in real GDP caused by an autonomous change in aggregate spending to the size of that autonomous change.

12. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. price index; 2. real GDP; 3. recessionary gap; 4. unemployment rate; _____ exists when aggregate output is below potential output. _____ the percentage of the total number of people in the labor force who are unemployed, calculated as unemployment/(unemployment + employment). _____ the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year. _____ a measure of the cost of purchasing a given market basket in a given year, where that cost is normalized so that it is equal to 100 in the selected base year;

13. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. price index; 2. real GDP; 3. recessionary gap; 4. unemployment rate; __3__ exists when aggregate output is below potential output. __4__ the percentage of the total number of people in the labor force who are unemployed, calculated as unemployment/(unemployment + employment). __2__ the total value of all final goods and services produced in the economy during a given year, calculated using the prices of a selected base year. __1__ a measure of the cost of purchasing a given market basket in a given year, where that cost is normalized so that it is equal to 100 in the selected base year;

14. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. Government transfers; 2. intermediate goods and services; 3. net exports; 4. underemployed; people who work part time because they cannot find full-time jobs. _____ people who work part time because they cannot find full-time jobs. _____payments by the government to individuals for which no good or service is provided in return. _____goods and services, bought from one firm by another firm, that are inputs for production of final goods and services. _____the difference between the value of exports and the value of imports.

15. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. Government transfers; 2. intermediate goods and services; 3. net exports; 4. underemployed; people who work part time because they cannot find full-time jobs. __4__ people who work part time because they cannot find full-time jobs. __1__payments by the government to individuals for which no good or service is provided in return. __2__goods and services, bought from one firm by another firm, that are inputs for production of final goods and services. __3__the difference between the value of exports and the value of imports.

16. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate supply curve; 4. automatic stabilizers; _____a graphical representation of the relationship between the aggregate price level and the quantity of aggregate output supplied if all prices, including nominal wages, were fully flexible. _____fiscal policy that is the direct result of deliberate actions by policy makers rather than rules. _____government spending and taxation rules that cause fiscal policy to be necessarily expansionary when the economy contracts and necessarily contractionary when the economy expands. _____ nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages.

17. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. Sticky wages; 2. discretionary fiscal policy; 3. long-run aggregate supply curve; 4. automatic stabilizers; __3__a graphical representation of the relationship between the aggregate price level and the quantity of aggregate output supplied if all prices, including nominal wages, were fully flexible. __2__fiscal policy that is the direct result of deliberate actions by policy makers rather than rules. __4__government spending and taxation rules that cause fiscal policy to be necessarily expansionary when the economy contracts and necessarily contractionary when the economy expands. __1__ nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages.

18. Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4