AGGD_SCLASS - 1 SR Keynesian Macro Aggregate Demand and...

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Unformatted text preview: 1 SR Keynesian Macro Aggregate Demand and Supply 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 1 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. In the long-run we are all dead ( depressionunemp / keynes singalong) invgame0, advise 1 Whats Doing in the News? 2 Course Issues Last Thursday class (cl) How/when to do assignments/hw Iclicker.com support/register NetID, serial number Smith not 123006789 and not smith@eden.rutgers.edu Cant read serial number Support/find your id Learning Resource Centers http://lrc.rutgers.edu/contact.shtml 1 point (of 1000) EC show me signed question sheet in class BLOGS coming / Snow? 3 2 Output and Prices in SR (Keynesian) Aggregate D&S Versus Micro D&S Agg D=C+I+G+NX C=f(Y-T,Wealth) I=f(i) G exog NX Agg D downward sloping 4 Agg D downward sloping P M/P r I D (p,y) Aggregate S curve Qs=f(P) cet. par. Upward sloping reflects cost, technology, etc P up -> profit up and Qs up Cet. Par. - Particularly wages What Shifts Aggregate Demand Curve? D = C, I, G, NX (=X-M) Anything that changes components C=f(Y-T,W,Expectations) Disposable income Wealth effect stock mkt, housing, real assets I=f(r, expectations) 5 Purchase of physical capital plant &equip animal spirits r up, I down G, NX exogenous for now Fiscal policy G->D T->(Y-T)->C->D Monetary Policy Ms&Md->r->I->D What Factors Shift SR Aggregate Supply? S costs of production Wages raw materials 6 Technology/ Productivity At any Y, different price In the SR only (LR different stories) Focus on Agg D in SR 3 Problem talk to neighbor In the late 1990s, aggregate demand was...
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AGGD_SCLASS - 1 SR Keynesian Macro Aggregate Demand and...

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