23Chp22-Econ3310

23Chp22-Econ3310 - Aggregate Supply Equilibrium Analysis...

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Unformatted text preview: Aggregate Supply Equilibrium Analysis Short run: business cycle bust Y ↓, higher prices P ↑ (stagflation) Long run: Y = Y n output unaffected, prices unaffected Negative short-run supply shock, e.g. P M ↑ Short run: business cycle boom Y ↑, higher prices P ↑ Long run: Y = Y n output unaffected, higher prices P ↑↑ Positive demand shock, e.g. M ↑, G ↑, T ↓, NX ↑ Prices and output Aggregate Demand ...
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