The aggregate-supply curve

The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions

Sticky-wage theory

The key difference between the economy in the short run and in the long run is the behavior of ________-____

aggregate-supply

In the short run, a decrease in prices causes the economy's production to

decrease

When the price level decreases below its natural rate, output __________ below its natural rate

decreases

An increase in the expected price level ______ the quantity of goods and services produced at any given price level and causes the aggregate supply curve to shift to the

decreases, left

In the short run, the price level does or does not affect the economy's output?

does

In the short run, an increase in prices causes the economy's production to

increase

Shifts in immigration and unemployment are factors of

labor

A change in weather patterns that makes farming more difficult shifts the supply curve to the

left

In the long run, an economies production of goods and services, it's ______ ___, depends on the supplies of labor, capital, and natural resources and the available technology used to turn these factors of production into goods and services.

real GDP

A greater number of workers would shift the supply curve to the

right

An increase in capital stock would shift the supply curve to the

right

Any event that increases real GDP would shift the long-run supply curve to the

right

As computer-use has spread throughout the economy, it has shifted the long-run aggregate supply curve to the

right

Decreased unemployment would shift the curve to the

right

When the price level rises above the level people expected, output ____ above its natural rate

rises

Declining _____ cause firms to cut back on production and employment when their prices are too high

sales

The theory that states that the prices of some goods and services also adjust sluggishly in respond to changing economic conditions

stick-price theory

The three theories that explain the upward slop of the aggregate-supply curve are the

sticky-wage, sticky-price, and misperception

The short-run aggregate supply curve is ______ sloping

upward

Tells us the total quantity of goods and services that firms produce and sell at any given price level

Aggregate supply curve

A lower price level causes misperceptions about relative prices, and these misperceptions induce suppliers to respond to the lower price level by _______ the quantity of goods and services supplied

Decreasing

Equation for the quantity of output supplied

Natural rate of output + a(actual price level-expected truce level)

The quantity of output supplied deviates from its long-run, or natural, level when the actual price level in the economy deviates from the price level that people _________ to prevail

expected

Wages, prices, and perceptions are set based on _________ price level

expected

A decrease in the price level ______ the quantity of goods and services produced at any given price level and causes the aggregate-supply curve to shift to the

increases, right

A decrease in capital stock would shift the supply curve to the

left

Any event that decreases real GDP would shift the long-run supply curve to the

left

Fewer worgers would shift the curve to the

left

If the government passed worker-health/safety policies that decreased production, it would shift the aggregate supply curve to the

left

Increased unemployment would shift the curve to the (increased minimum wage)

left

When wages are higher, the short-run aggregate supply curve shifts to the ____

left

Stickiness of wages gives firms an incentive to produce ____ output when the price level turns out lower than expected, and produce ____ output when the price level turns out higher than expected.

less, more

Because the price level does not affect the _____-____ determinants of real GDP, the long-run aggregate supply curve is _______

long-run, vertical

According to this theory, changes in the overall price level can temporarily mislead suppliers about what is happening in the individual markets in which they sell their output.

misperception theory

A shift in the aggregate supply curve results in a change that affects the-

natural rate of output

The long-run level of production, or the level of production toward which the economy gravitates in the long run, is called the-

natural rate of output

Discovery of new minerals shifts the aggregate supply curve to the

right

Opening up international trade, allowing countries to specialize in production processes, shifts the aggregate supply curve to the

right

When wages are lower, the short-run aggregate supply curve shifts to the

right

____-___ fluctuations in output and the price level should be viewed as deviations from the continuing ____-___ trends of output growth and inflation

short-run, long-run

In the long run, the aggregate-supply curve is ________, whereas in the short run, the aggregate-supply curve is ________ sloping

vertical, upward