Lecture_Economics_Notes_5-6-2010

Lecture_Economics_Notes_5-6-2010 - Lecture Notes Chapter 23...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture Notes Economics T-Th A. Ordonez Chapter 23 809-195-3K1C 5/6/10 Chpt. 23 THE AGGREGATE-SUPPLY CURVE In the long run, the aggregate-supply curve is vertical because the price level does not affect long run determinants of real GDP. In the short run, the aggregate-supply curve is upward sloping. In the long run, an economy’s production of goods and services depends on its supplies of labor, capital, and natural resources and on the available technology used to turn these factors of production into goods and services. The price level does not affect these variables in the long run. The long-run aggregate supply represents the classical dichotomy and money neutrality. The long-run aggregate-supply curve is vertical at the natural rate of output , which is the production of goods and services that an economy achieves in the long run when unemployment is at its normal rate. This level of production is also referred to as potential output or full-employment output. The natural rate of output is level of output towards which the economy gravitates in
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Lecture_Economics_Notes_5-6-2010 - Lecture Notes Chapter 23...

This preview shows document pages 1 - 2. Sign up to view the full document.

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