Cheat Sheet

Cheat Sheet - Factors that Shift Demand 1. More Income 2....

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Factors that Shift Demand 1. More Income 2. More consumers 3. Price of related goods 4. Changes in expectations 5. Demographic changes 6. Prefernces Factors that Shift Supply 1. Resource Prices 2. Technology 3. Nature/political disruptions 4. Taxation Factors that Shift Aggregate Demand 1. Change in real wealth 2. Changes in the real interest rate 3. Changes in expectations 4. Changes in expected inflation 5. Changes in income abroad 6. Changes in exchange rate Factors that Shift Long-Run Aggregate Supply 1. Changes in the supply of resources 2. Technological change 3. Institutional changes Factors that Shift Short-Run Aggregate Supply 1. Changes in resource prices 2. Change in expected inflation rate 3. Supply shocks Why Gold standard failed a. 1870 – 1914, 1919-1929 Gold standard (fixed exchange rate) 1. 1$=X oz. of Gold 2. Money supply MV(velocity of money)=PQ (nominal GDP) ii. Trade between US and UK. iii. US output is increasing Price in US decreases iv. UK wants US goods, so goods go to UK and gold goes to US v. Prices fall in the UK, so net effect is a global drop in prices
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Cheat Sheet - Factors that Shift Demand 1. More Income 2....

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