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Unformatted text preview: rve System) Changes in expectations
– Especially about GDP Changes in “foreign variables” What happens to the US AD if:
What happens to the US AD if:
China’s economy slows down? A tax cut increases disposable income? The gloomy economic outlook dampens investment? The US must build infrastructure to host the 2024 Olympics Interest rate cuts encourage investment? Prices rise as food becomes more expensive? Workers become more productive? Aggregate Supply
Aggregate Supply AS is the key to macroeconomic policy Aggregate Supply
Aggregate Supply AS is the key to macroeconomic policy – If AS is steep – AD shifts have little impact on GDP P AS AD’ AD
y Aggregate Supply
Aggregate Supply AS is the key to macroeconomic policy – If AS is flat – AD shifts have a large impact on GDP
AD AS y Aggregate Supply
Aggregate Supply AS isthe key to macroeconomic policy In the long run AS is vertical – Set by the a...
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This note was uploaded on 02/25/2014 for the course BUSINESS 2101 taught by Professor Gerst during the Spring '12 term at Temple.
- Spring '12