AGGD_SCLASS - SR Keynesian Macro Aggregate Demand and...

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1 1 SR Keynesian Macro –Aggregate Demand and Supply s The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. s “In the long-run we are all dead” ( depressionunemp / keynes singalong) What’s Doing in the News? 2 Course Issues s 9/15 last day to add/drop s Last Thursday clicks don’t count s Images, chat rooms, how to do hw s support/register NetID, serial number b Smith not 123006789 b Can’t read serial number –Support/find your id s Learning Resource Centers b 1 point (of 1000) EC – signed question sheet 3
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2 4 Output and Prices in SR (Keynesian) s Aggregate D&S b s Agg D=C+I+G+NX b C=f(Y-T,Wealth) b I=f(i) G exog NX s Agg D downward sloping P ↓→ M/P ↑→ r ↓→ I ↑ → D ↑→ (p,y) s Aggregate S curve Qs=f(P) cet. par. Upward sloping s reflects cost, technology, etc s P up -> profit up and Qs up s Cet. Par. - Particularly wages 5 What Shifts Aggregate Demand Curve? s D = C, I, G, NX (=X-M) b Anything that changes components s C=f(Y-T,W,Expectations) b Disposable income b Wealth effect – stock mkt, housing, real assets s I=f(r, expectations) s Purchase of physical capital – plant s animal spirits s r up, I down s G, NX exogenous for now s Fiscal policy G->D T->(Y-T)->C->D s Monetary Policy 6 What Factors Shift SR Aggregate Supply? b
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This note was uploaded on 02/08/2011 for the course ECONOMICS 220:103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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AGGD_SCLASS - SR Keynesian Macro Aggregate Demand and...

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