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The quantity of real production or real aggregate output (or better yet, real gross domestic product) produced by the macro-economy when resources are at full employment. For all practical purposes, full-employment real production is real GDP produced when unemployment is at it's natural level, the combination of frictional and structural unemployment that can be maintained without inflation (or deflation either). For the aggregate market analysis, this is the level of real production achieved and maintained in the long run. The long-run aggregate supply curve is vertical at full-employment real production.
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What do most economists agree that the immediate determinant of the volume of output and employment is the?
Level of total spending
Most economists agree that the immediate determinant of the volume of output and employment is the?
Level of total spending
An increase in the federal budget deficit?
Raises the equilibrium level of output and employment.
How output and employment equilibrium is achieved through production in the classical theory?
equlibrium output and employment
What are the 3 economic goals of any country?
1. To create stable, economic growth. 2. To have full employment and low unemployment. 3. To have stable stable prices.
What is full employment GDP?
Full employment GDP, also known as potential GDP, is the level of output that an economy can produce when all resources are fully utilized, including labor. It represents the maximum sustainable level of output without causing inflation. It serves as an important benchmark for policymakers to assess the health of the economy and make informed decisions.
What do most economists agree that the immediate determinant of the volume of output and employment is the?
Level of total spending
Most economists agree that the immediate determinant of the volume of output and employment is the?
Level of total spending
An increase in the federal budget deficit?
Raises the equilibrium level of output and employment.
How output and employment equilibrium is achieved through production in the classical theory?
equlibrium output and employment
What are the 3 economic goals of any country?
1. To create stable, economic growth. 2. To have full employment and low unemployment. 3. To have stable stable prices.
What does the term full employment mean?
Full employment refers to a situation where all individuals who are willing and able to work at prevailing wages are employed. In an economy at full employment, the unemployment rate is at its natural rate, and there is no cyclical unemployment. It is a state where the economy is operating at its optimal level.
If the price level rises and the money wage rate rises by the same percentage what happens to the quantity of real GDP supplied?
When the price level and the money wage rate change by the same percentage, the real wage rate remains constant at its full employment equilibrium level so employment remains constant and real GDP remains constant at "potential GDP" which is the quantity of real GDP at full employment.
Why is the long run aggregate supply LRAS curve vertical?
The Long-Run Aggregate Supply Curve is vertical at full-employment GDP with respect to the price level. In the long-run the quantity of output supplied depends on the economy's resource endowment, technology, and its governing institutions. The price level does not affect these variables in the long-run.
A recession is a period in which?
Domestic output, and employment falls
What is maximum employment?
Maximum employment is the level of employment rates where the type of employment is not in demand. The level is typically a bit above 0%.Ê
Keynes considered full employment GDP to be?
The level of GDP where all labour is employed (that is, long-run unemployment is minimised).
