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5 Cards in this Set
- Front
- Back
A higher price level reduces the real value of purchasing power of the public's accumulated savings balances, causing less consumption
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Real balances effect
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Aggregate demand slopes downward because
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-Real-balances effect
-Interest-rate effect -Foreign purchases effect |
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An increase in money demand drives up the price to get that money, reducing the amount of real output demanded
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Interest-rate effect
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A rise in price level reduces the amount of U.S. goods demanded as net exports
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Foreign purchases effect
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Productivity equation
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Productivity = total output/total inputs
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