lecture6 - Lecture 6 CHAPTER 10 Aggregate Demand I slide 1...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 1 Lecture 6
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 2 In this chapter you will learn In this chapter you will learn the  IS     curve, and its relation to the Loanable Funds model the  LM     curve, and its relation to the Theory of Liquidity Preference  how the  IS-LM     model determines income  and the interest rate in the short run when  P   is fixed 
Background image of page 2
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 3 Context Context Chapter 9 introduced the model of aggregate  demand and aggregate supply.  Long run prices flexible technology unemployment equals its natural rate Short run prices fixed output determined by aggregate demand unemployment is negatively related to output
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 4 Context Context This chapter develops the  IS-LM     model, the  theory that yields the aggregate demand  curve.  We focus on the short run and assume the  price level is fixed.  
Background image of page 4
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 5 The Keynesian Cross The Keynesian Cross A simple closed economy model in which  income is determined by expenditure.    (due to J.M. Keynes) Notation:   I   =  planned  investment E   =   C   +  I   +  G   = planned expenditure Y   = real GDP = actual expenditure expenditure:  unplanned inventory investment
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER 10 CHAPTER 10 Aggregate Demand I Aggregate Demand I slide 6 The IS curve and the Loanable Funds model The IS curve and the Loanable Funds model S I r I   ( r     )   r 1 r 2 r Y Y 1 r 1 r 2 (a) The L.F. model (b)   The  IS     curve Y 2 S 1 S 2 IS
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/14/2010 for the course ECON 3353 taught by Professor Prodan during the Spring '05 term at University of Alabama - Huntsville.

Page1 / 23

lecture6 - Lecture 6 CHAPTER 10 Aggregate Demand I slide 1...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online