ii. unit ii.. c. aggregate de mand and aggregate supply 1. equilibrium real gdp and price level with...
TRANSCRIPT
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II. UNIT II..
C. Aggregate De mand and Aggregate Supply1. Equilibrium real GDP
and price level withstationary AD and AS
2. The depiction of cyclical unemployment, demand-pullInflation, and supply-side
inflation3. Aggregate demand stabilization
policies
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EQUILIBRIUM REAL GDP AND PRICE LEVEL
SHORT RUN
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
WHAT'S TRUE IN EQUILIBRIUM?
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
WHAT'S TRUE IN EQUILIBRIUM?
PRICE LEVEL WHEREAGGREGATE QUANTITY SUPPLIEDEQUALS AGGREGATE QUANTITY
DEMANDED
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
WHAT'S TRUE IN EQUILIBRIUM?
PRICE LEVEL WHEREAGGREGATE QUANTITY SUPPLIEDEQUALS AGGREGATE QUANTITY
DEMANDED
WE WILL END UP THERE
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
NOTHING INHERENTLY GOODOR BAD ABOUT THE
EQUILIBRIUM
IT'S SIMPLY WHEREWE WILL END UP
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PRICELEVEL
REALGDP
AD
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PRICELEVEL
REALGDP
AD
AGGREGATE
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PRICELEVEL
REALGDP
AS
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PRICELEVEL
REALGDP
ASAGGREGATE
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PRICELEVEL
REALGDP
AS
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FIRST FIVE DETERMINE PRODUCTION COSTSPRODUCTION COST UP----SUPPLYDECREASES, ETC.1. resource prices2. technology and/or productivity3. taxes and subsidies4. price of other goods (particularly price of production alternatives)5. expectations (sellers' expectations about future prices) ************************6. number of sellers
DETERMINANTS OF SUPPLY
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PRICELEVEL
REALGDP
AS
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PRICELEVEL
REALGDP
ASPRODUCTION COSTS
UP
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PRICELEVEL
REALGDP
AS
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PRICELEVEL
REALGDP
AS
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PRICELEVEL
REALGDP
ASPRODUCTION COSTS
DOWN
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PRICELEVEL
REALGDP
AS
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
EQ. GDP
AS
AD
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
EQ.PRICELEVEL
EQ.REAL GDP
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
PRICELEVEL
GDPPRODUCED
GDPDEMANDED
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PRICELEVEL
REALGDP
AS
AD
EQ. GDP
EQ.PRICELEVEL
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PRICELEVEL
REALGDP
AS
AD
PRICELEVEL
GDPDEMANDED
GDPPRODUCED