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Prices+and+Output+II+-+F11

Prices+and+Output+II+-+F11 - Prices and Output Output...

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Prices and Prices and Output Output Aggregate Aggregate Demand Demand and Supply and Supply Aggregate Supply Aggregate Supply and Equilibrium and Equilibrium
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Aggregate Demand Aggregate Demand Aggregate Demand Movement along Price changes Shifts Fiscal Policy Monetary Policy The FED Changes in C, INV, and NX independent of Price and interest rate changes. Nick Noble Prices and Output P AD Y Eco 301 - Fall 2011 2
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Aggregate Supply Aggregate Supply Aggregate Supply The amount of output (Real GDP) that firms find profitable to produce. Nick Noble Prices and Output P AS Y Eco 301 - Fall 2011 3
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Aggregate Supply Aggregate Supply Aggregate Supply ↑↓ Movements along the aggregate supply curve. P↑ (holding wages and other costs constant) Real wages Business Profits ↑ Extra output will increase profits Output ↑ ( Real GDP –Y ↑) Nick Noble Prices and Output P AS Y Eco 301 - Fall 2011 4
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Aggregate Supply Aggregate Supply Aggregate Supply Movements along the aggregate supply curve. P↑ Y ↑ Nick Noble Prices and Output P AS Y Eco 301 - Fall 2011 5
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Aggregate Supply Aggregate Supply Aggregate Supply Shifts Resource Growth Capital Stock (K) growth Investment exceeds depreciation K ↑ Y ↑ Labor Force (L) Population growth L ↑ Y Nick Noble Prices and Output P AS Y AS(K↑) Eco 301 - Fall 2011 6
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Investment in the US Investment in the US Nick Noble Prices and Output Eco 301 - Fall 2011 7
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