tailieunhanh - Lecture Macroeconomics - Chapter 9: Aggregate demand and aggregate supply

Chapter 9 - Aggregate demand and aggregate supply. After studying this chapter you will be able to understand: Why the aggregate demand curve is downward sloping, and what factors shift the entire curve; what determines the shape of the short run aggregate supply curve, and what factors shift the entire curve; how the equilibrium price level and real GDP are determined; the distinction between the short-run and long-run supply curve; the nature and causes of recessionary and inflationary gaps. | Chapter 9 Aggregate Demand and Aggregate Supply SLIDES PREPARED BY JUDITH SKUCE, GEORGIAN COLLEGE * In this chapter you will learn Why the aggregate demand curve is downward sloping, and what factors shift the entire curve What determines the shape of the short run aggregate supply curve, and what factors shift the entire curve How the equilibrium price level and real GDP are determined * In this chapter you will learn The distinction between the short-run and long-run supply curve The nature and causes of recessionary and inflationary gaps * Chapter 9 Topics Aggregate Demand Aggregate Supply: The Short Run Equilibrium: Real Output & the Price Level Short-Run & Long-Run Aggregate Supply Equilibrium vs Full-Employment GDP * The amounts of real output that buyers collectively desire to purchase at each possible price level Aggregate Demand (AD): AD = C + Ig + G + Xn * Aggregate Demand (AD) Aggregate Quantity Demanded (Real GDP) and the Price Level are inversely . | Chapter 9 Aggregate Demand and Aggregate Supply SLIDES PREPARED BY JUDITH SKUCE, GEORGIAN COLLEGE * In this chapter you will learn Why the aggregate demand curve is downward sloping, and what factors shift the entire curve What determines the shape of the short run aggregate supply curve, and what factors shift the entire curve How the equilibrium price level and real GDP are determined * In this chapter you will learn The distinction between the short-run and long-run supply curve The nature and causes of recessionary and inflationary gaps * Chapter 9 Topics Aggregate Demand Aggregate Supply: The Short Run Equilibrium: Real Output & the Price Level Short-Run & Long-Run Aggregate Supply Equilibrium vs Full-Employment GDP * The amounts of real output that buyers collectively desire to purchase at each possible price level Aggregate Demand (AD): AD = C + Ig + G + Xn * Aggregate Demand (AD) Aggregate Quantity Demanded (Real GDP) and the Price Level are inversely related as follows: Price Level Real GDP AD Figure 9 - 1 * .is downsloping because of the following effects of a change in price level: 1 - Real-balances Effect 2 - Interest-rate Effect 3 - Foreign Trade Effect Aggregate Demand (AD) Remember: these effects are caused by price level changes * 0 Price level Real domestic output, GDP CHANGES IN AGGREGATE DEMAND AD1 AD Can Increase Figure 9 - 2 © 2002 McGraw-Hill Ryerson Ltd. Macroeconomics, Chapter 9 * 0 CHANGES IN AGGREGATE DEMAND AD1 AD2 AD Can Increase shift RIGHT Figure 9 - 2 © 2002 McGraw-Hill Ryerson Ltd. Macroeconomics, Chapter 9 Price level Real domestic output, GDP * 0 CHANGES IN AGGREGATE DEMAND AD1 AD Can Decrease Figure 9 - 2 © 2002 McGraw-Hill Ryerson Ltd. Macroeconomics, Chapter 9 Price level Real domestic output, GDP * 0 CHANGES IN AGGREGATE DEMAND AD1 AD3 AD Can Decrease shift LEFT Figure 9 - 2 © 2002 McGraw-Hill Ryerson Ltd. Macroeconomics, Chapter 9 Price level Real domestic output, GDP .