tailieunhanh - Ebook Economics today - The macro view (16th edition): Part 2

(BQ) Part 2 book "Economics today - The macro view" has contents: Classical and keynesian macro analyses, fiscal policy, deficit spending and the public debt, money, banking, and central banking, domestic and international dimensions of monetary policy, stabilization in an integrated world economy,.and other contents. | 10GDP and the Price Real During the early 2000s, Japan’s price level declined at a steady pace. Then, between late 2003 and 2008, the price level went through brief periods in which it oscillated very slightly upward or downward. On net, however, Japan’s price level still dropped somewhat during this second period. Then, in the late 2000s, the price level suddenly jumped upward at a rate of more than 2 percent per year before plunging downward at a rate exceeding 2 percent per year. What caused Japan’s price level to behave as it did across the 2000s? To answer this question, you must understand how a nation’s equilibrium price level is determined. Helping you develop an understanding of this concept is a key goal of this chapter. LEARNING OBJECTIVES Level in the Long Run After reading this chapter, you should be able to: ̈ Understand the concept of long-run aggregate supply ̈ Describe the effect of economic growth on the long-run aggregate supply curve ̈ Explain why the aggregate demand curve slopes downward and list key factors that cause this curve to shift ̈ Discuss the meaning of long-run equilibrium for the economy as a whole ̈ Evaluate why economic growth can cause deflation ̈ Evaluate likely reasons for persistent inflation in recent decades MyEconLab helps you master each objective and study more efficiently. See end of chapter for details. 209 210 PART 3 ■ REAL GDP DETERMINATION AND FISCAL POLICY Did You Know That ? until the spring of 2008, the . price level had not exhibited a decline during any single 12-month interval since 1955? Thus, the . economy experienced a full year of deflation, or a decrease in the price level over time, for the first time in half a century. Why was there such a lengthy period between deflationary bouts in the United States? What can cause deflation to occur? In addition, why did inflation, or an increase in the prive level over time, take place during every other 12-month interval following 1955? To answer .