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Chapter 7 Vocabulary

Across
The tendency for a change in the price level to affect the interest rate and thus to affect the quantity of investment demanded
The use of central bank policies to influence the level of economic activity
The ration of the change in the quantity of real GDP demanded at each price level to the initial change in one or more components of aggregate demand that produced it
The price of a currency in terms of another currency or currencies
A price that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus
The tendency for a change in the price level to affect net exports
The use of government purchases transfer payments and taxes to influence the level of economic activity
In macroeconomic analysis a period in which wages and prices are flexible
A stabilization policy designed to reduce real GDP
In macroeconomic analysis a period in which wages and some other prices are sticky and do not respond to changes in economic conditions
The gap between the level of real GDP and potential output when real GDP is less than potential
Down
A policy in which the government or central bank acts to move the economy to its potential output
A stabilization policy designed to increase real GDP
A graphical representation of aggregate demand
The relationship between the total quantity of goods and services demanded and the price level
The level of output an economy can achieve when labor is employed at its natural level
The gap between the level of real GDP and potential output when real GDP is greater than potential