Bài giảng MicroEconomics - Chapter 35 Extending the Analysis of Aggregate Supply

Extending the Analysis of Aggregate SupplyMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.From Short Run to Long RunShort runInput prices inflexibleUpsloping aggregate supplyLong runInput prices fully flexibleVertical aggregate supplyThe transition?LO135-2From Short Run to Long RunProduction above potential output:High demand for inputsInput prices riseShort run aggregate supply shifts leftReturn to potential outputProduction below potential outputGraphical examplesLO135-3From Short Run to Long RunP3P1P2P3P1P2Real Domestic OutputReal Domestic OutputQfShort-RunAggregate SupplyLong-RunAggregate Supplya1a2a3b1c1Price LevelPrice LevelAS3AS2AS1ASLRQfQ2Q3AS1a1a2a3LO135-4From Short Run to Long RunReal Domestic OutputLong Run EquilibriumPrice LevelP1QfaAS1ASLRAD1LO135-5Extended AD-AS ModelReal Domestic OutputDemand-Pull Inflation Price LevelP1QfaAS1ASLRAD1AD2AS2cbP2P3Q2LO235-6Extended AD-AS ModelReal Domestic OutputCost-Push Inflation Price LevelP1QfaAS1ASLRAD1AD2AS2bcP2P3Q2LO235-7Extended AD-AS ModelReal Domestic OutputRecessionPrice LevelP1QfaAS1ASLRAD1AD2AS2bcP2P3Q1LO235-8Extended AD-AS ModelExplaining ongoing inflationOngoing economic growth shifts aggregate supply Ongoing increases in money supply shift aggregate demand Small positive rate of inflationLO235-9Price LevelReal GDPCapital GoodsConsumer GoodsEconomic Growth, Ongoing InflationProductions PossibilitiesLong Run Aggregate SupplyIncrease in production possibilitiesIncrease in long-run aggregate supplyLO235-10Inflation and UnemploymentLow inflation and unemploymentFed’s major goalsCompatible or conflicting?Short-run tradeoffSupply shocks cause both rates to riseNo long-run tradeoffLO335-111960s economists believed in stable, predictable tradeoffPhillips curve shifts over timeAdverse supply shocks 1970sOPEC oil price shockStagflationStagflation’s demise 1980sThe Phillips CurveLO335-12The Phillips CurveNo long-run tradeoff between inflation and unemploymentShort-run Phillips curveRole of expected inflationLong-run vertical Phillips curveDisinflationLO435-13The Phillips CurveLO41413121110987654321Annual rate of inflation (percent)Unemployment rate (percent)35-14Taxes and Aggregate SupplySupply-side economicsTax incentives to workTax incentives to save and investThe Laffer curveTax Rate (Percent)Tax Revenue (Dollars)100m0nlmLaffer CurveMaximumTax RevenueLO535-15Taxes and Aggregate SupplyCriticisms of the Laffer curveTaxes, incentives, and timeInflation and higher real interest ratesPosition on the curveRebuttal and evaluationLO535-16