226 ❯ Glossarysupply schedule A table showing quantity supplied
for a good at various prices.
supply shock An economy-wide phenomenon that
affects the costs of firms and results in a shifting
AS curve.
supply-side fiscal policy Fiscal policy centered on
incentives to save and invest to prompt economic
growth with very little inflation.
surplus A situation in which, at the going market
price, the quantity supplied exceeds the quantity
demanded.
tax multiplier The magnitude of the effect that a
change in lump sum taxes has on real GDP.
technology A nation’s knowledge of how to pro-
duce goods in the best possible way.
theory of liquidity preference Keynes’ theory that
the interest rate adjusts to bring the money market
into equilibrium.total welfare The sum of consumer surplus and
producer surplus.
trade-offs The reality of scarce resources implies
that individuals, firms, and governments are con-
stantly faced with difficult choices that involve
benefits and costs.
transaction demand The amount of money held in
order to make transactions.
trough The bottom of the business cycle where a
contraction has stopped and is about to turn up.
underground economy The unreported or illegal
activity, bartering, or informal exchange of cash
for goods and services that are not reported in
official tabulations of GDP.
velocity of money The average number of times
that a dollar is spent in a year.
world price The global equilibrium price of a good
when nations engage in trade.15_AP Macroeconomics_2018_APPx_p215-238.indd 226 30/04/18 4:30 PM