Menu_06_Apr_11 - -expecting to fall—want to sell more...

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TODAY’S MENU: Wednesday 06 April 2011 I. BUSINESS A. Practice Problems 1. Chapter 27: 4, 5, 8-10, 12, 14, 15, 18 B. Third exam: Next time II. SUBSTANCE A. Aggregate Supply -marco: willingness to sell real GDP of COUNTRY 1. Short run (SRAS) vs. Long run (LRAS) a. Determinant of quantity of real GDP supplied i. Short run -profitability—businesses want to sell more -maximize profitability ii. Long run -less profitable—labor cost goes down -benefits go down too -other input cost: utilities, b. Determinants of SRAS i. Labor costs (wage push) (-) ii. Other input costs (supply shocks) (-) -less profitable, going to sell less iii. Productivity (+) -increase profitability iv. Expected future aggregate price level (-) -what to sell at highest price possible -less willing to sell today
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Unformatted text preview: -expecting to fall—want to sell more today B. Equilibrium 1. Short run: AD = SRAS a. Case 1: Recession-no job opening available -down side of business cycle b. Case 2: Expansion c. Case 3: Full employment-can only survive in long run 2. Long run: AD = SRAS = LRAS 3. From short run to long run a. Self-Correcting Mechanism (SCM): A labor market story-self: talking about marco economy on its own without policy makers C. Aggregate Supply and Demand: Examples 1. Six questions to answer in each scenario-everything else held constant, 6 questions to answer –Must answer -change in GDP, change in unemployment rate, what is change in AGG price level 2. Examples III. NEXT TIME A. Third exam over Chapters 24, 25, 27...
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This note was uploaded on 02/14/2012 for the course ECON 2030 taught by Professor Bong during the Fall '07 term at LSU.

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Menu_06_Apr_11 - -expecting to fall—want to sell more...

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