Bài giảng MicroEconomics - Chapter 029 Aggregate Demand and Aggregate Supply

Aggregate Demand andAggregateSupplyChapter 29McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter ObjectivesAggregate demand (AD)Aggregate supply (AS)How AD and AS determine equilibrium price and real GDPThe AD-AS modelAggregate DemandAmount of real GDP purchased at each price levelWhy the downward slope?Real-balances effectInterest-rate effectForeign purchases effectConsumption, investment, and net exportsAggregate Demand CurveReal Domestic Output, GDPPrice LevelADAggregateDemandAggregate DemandDeterminants of aggregate demandFixed variables along the demand curve Change in fixed variable Multiplier effectConsumer spending variables:Consumer wealthConsumer expectationsHousehold borrowingPersonal taxesAggregate DemandInvestment spending variables Real interest ratesExpected returnsFuture business conditionsTechnologyDegree of excess capacityBusiness taxesAggregate DemandGovernment spendingNet export spending variablesNational income abroadExchange ratesChanges in Aggregate DemandReal Domestic Output, GDPPrice LevelAD1Increase inAggregateDemandAD3AD2Decrease in AggregateDemandAmount real GDP produced at each price levelThree time horizonsImmediate short runFew days to a few monthsAll prices fixedImplicit price agreements Contractual agreementsAggregate SupplyAggregate SupplyReal Domestic Output, GDPPrice LevelASISRImmediate-short-run Aggregate SupplyQfShort runInput prices fixedOutput prices variableReal profit changesLong runAll prices variableFull employment GDPAll prices adjustAggregate SupplyReal Domestic Output, GDPPrice Level0QfAggregate Supply(Short Run)Slope not constant: per unit production cost and firm capacityAggregate SupplyAggregate SupplyReal Domestic Output, GDPPrice LevelASLRLong-runAggregate SupplyQfDeterminants of aggregate supplyChange in input priceDomestic resource pricesPrices of imported resourcesChange in productivityChange in legal-institutional environmentBusiness taxes and subsidiesGovernment regulationAggregate SupplyReal Domestic Output, GDPPrice LevelAS1Increase inAggregateSupplyAS3AS2Decrease inAggregateSupplyAggregate SupplyEquilibriumReal OutputDemanded(Billions)Price Level(Index Number)Real OutputSupplied(Billions)$5065085105125141081041009692$513512510507502Equilibrium Price Level andEquilibrium Real GDPReal Domestic Output, GDP(Billions of Dollars)Price Level10092502510514abADASEquilibriumEquilibriumChanges in EquilibriumReal Domestic Output, GDPPrice LevelADASP1P2Q2Q1QfAD1Increase in Aggregate DemandDemand-PullInflationChanges in EquilibriumReal Domestic Output, GDPPrice LevelAD1ASP1P2Q1Q2QfAD2Decrease in Aggregate DemandCreates aRecessionacbDecrease in aggregate demandRecession and cyclical unemploymentDeflation?Downward price inflexibility:Fear of price warsMenu costsWage contractsMorale, effort, and productivityEfficiency wagesMinimum WageChanges in EquilibriumReal Domestic Output, GDPPrice LevelADAS1P1P2Q1QfDecrease in Aggregate SupplyCost-PushInflationAS2abChanges in EquilibriumReal Domestic Output, GDPPrice LevelAD1AS2P1P2Q2Q1Increases in Aggregate Supply – Full-Employment With Price-Level StabilityAS1bAD2cP3Q3aChanges in EquilibriumImpact of Oil Prices Aggregate supply shocksCost push inflationOil prices affected core inflation prior to 1980Core inflation unaffected post 1980Energy efficiencyComposition of GDPFed vigilanceKey Termsaggregate demand-aggregate supply (AD-AS) modelaggregate demandreal-balances effectinterest-rate effectforeign purchases effectdeterminants of aggregate demandaggregate supplyimmediate-short-run aggregate supply curveshort-run aggregate supply curvelong-run aggregate supply curvedeterminants of aggregate supplyproductivityequilibrium price levelequilibrium real outputmenu costsefficiency wagesNext Chapter PreviewFiscal Policy,Deficits, and DebtThe Relationship of the Aggregate Demand Curve to the Aggregate Expenditures ModelAppendixDeriving the AD CurvePrice LevelAggregate Expenditures(billions of dollars)45°AE2 (at P2 )AE3 (at P3 )AE1 (at P1 )Q1Q2Q3Real Domestic Product, GDPADP3P2P1As Price Levels IncreaseReal GDPDeclinesDeriving the AD CurvePrice LevelAggregate Expenditures45°Real Domestic Product, GDPAE2 (at P1 )AE1 (at P1 )Q1Q2AD1P1Increase in AggregateExpendituresIncrease inAggregateDemandAD2Deriving the AD CurvePrice LevelAggregate Expenditures45°Real Domestic Product, GDPAE2 (at P1 )AE1 (at P1 )Q1Q2AD1P1AD2The Shift in the Aggregate DemandCurve is a Multipleof the initial Changein AggregateExpenditures