Sch10_1 - Ch10.ISLMmodel CHAPTER 10 Aggregate Demand I 1...

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1 CHAPTER 10 Aggregate Demand I Ch 10. IS-LM model
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2 CHAPTER 10 Aggregate Demand I Goals the IS curve, and its relation to: the LM curve, and its relation to: how the IS - LM model determines income and the interest rate in the short run when P is fixed
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3 CHAPTER 10 Aggregate Demand I The Big Picture Keynesian Cross Keynesian Cross Theory of Liquidity Preference Theory of Liquidity Preference IS curve IS curve LM curve LM curve IS-LM model IS-LM model Agg. demand curve Agg. demand curve Agg. supply curve Agg. supply curve Model of Agg. Demand and Agg. Supply Model of Agg. Demand and Agg. Supply Explanation of short-run fluctuations Explanation of short-run fluctuations
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4 CHAPTER 10 Aggregate Demand I Context Chapter 9 introduced the model of aggregate demand and aggregate supply. Long run prices flexible output determined by factors of production & technology unemployment equals its natural rate Short run prices fixed output determined by aggregate demand unemployment negatively related to output
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CHAPTER 10 Aggregate Demand I Context This chapter develops the IS - LM model, the basis of the aggregate demand curve. We focus on the short run and assume the price level is fixed (so, SRAS curve is horizontal). This chapter (and chapter 11) focus on the closed-economy case. Chapter 12 presents the open-economy case.
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Sch10_1 - Ch10.ISLMmodel CHAPTER 10 Aggregate Demand I 1...

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