Log in
HomeClass Notes1,200,000CA670,000

ECN 204 Lecture Notes - Lecture 8: Human Capital, Output Gap, Refinancing

19 views3 pages
limeporcupine729
27 Jan 2017
School
Ryerson University
Department
Economics
Course
ECN 204
Professor
Amy Peng

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

The aggregate demand-aggregate supply model: shows how economic factors and policies can simultaneously affect the overall price level as well as real output. Changes in equilibrium: are caused by changes (shifts) in ad and/or as. For any initial increase in aggregate demand, the resulting increase in real output will be smaller the greater the increase in the price level. Deflation is a rarity in the canadian economy. Real output takes the full brunt of the decline in ad because product prices are (cid:498)sticky(cid:499) in the short run: wage contracts, morale, effort, & productivity, minimum wage, menu costs, fear of price wars. Effects of a leftward shift in as are doubly bad: output decreases, price level increases. Increases in as should normally lead to inflation. Recently, productivity growth has shifted the long-run as curve to the right. From the short run to the long run.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

ECN 204 Lecture Notes - Lecture 11: Aggregate Supply, Aggregate Demand, Potential Output
greensheep522
ECN 204 Lecture Notes - Lecture 16: Aggregate Supply, Phillips Curve, Aggregate Demand
indigolizard188
ECN 204 Chapter Notes - Chapter 15: Taylor Rule, Laffer Curve, Money Supply
olivetrout85

Related Questions

Determine the effect on either the aggregate demand curve (is it a rightward or a leftward shift?), the aggregate short-term supply curve, and the long-term aggregate supply curve (does the upward sloping portions of the SAS curve shift left or right, or does the vertical portion of the LAS curve shift to the right or the left?). Also determine the effect on the price level, the real output level, and employment/unemployment. Explain and express this graphically using the AS/AD macro model.

The rapid development of internet technologies during the 1990s allowed businesses to produce goods and services cheaper than before and also gave rise to completely new services. We would show this change in the aggregate-demand/aggregate-supply model by moving the aggregate supply curve down (right) with little change in aggregate demand. Improvements in technology increase potential output and reduce costs, moving the short aggregate supply curve down and the long-run aggregate supply curve to the right.

Determine the effect on either the aggregate demand curve (is it a rightward or a leftward shift?), the aggregate short-term supply curve, and the long-term aggregate supply curve (does the upward sloping portions of the SAS curve shift left or right, or does the vertical portion of the LAS curve shift to the right or the left?). Also determine the effect on the price level, the real output level, and employment/unemployment. Explain and express this graphically using the AS/AD macro model.

1. Russia has experienced hyperinflation in the 1990s. Other things equal, the expectations by Russians of worsening inflation in the future would probably shift the AD curve to the right.

A. A decrease in aggregate supply can result in:

  1. a recession
  2. cost-push inflation
  3. demand-pull inflation
  4. unemployment 

B. In the short run (intermediate-range) of the aggregate supply curve, higher aggregate demand will increase

  1. the price level but reduce real GDP.
  2. real GDP without raising the price level
  3. the price level without affecting real GDP
  4. both the price level and real GDP

C. Which of the following helps explain why real GDP is inversely related to the price level within the framework of the AD-AS model?

  1. As prices fall, domestic consumers have an incentive to buy more of the cheaper goods and services
  2. As prices fall, the wealth of people holding the fixed quantity of money increases, causing them to expand their purchases of goods and services
  3. As prices fall, the government will have to reduce taxes, which will lead to an increase in the number of goods and services purchased
  4. As prices fall, the monetary authorities will have to increase the money supply, which will lead to an increase in the number of goods and services purchased