ECON102 Lecture Notes - Lecture 6: Aggregate Supply, Potential Output, Fiscal Policy

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Maryann Vaughan

Document Summary

Quantity of real gdp supplied = total quantity that firms plant to produce during a given period. Aggregate supply = relationship between the quantity of real gdp supplied and the price level. Long-run aggregate supply = aggregate supply when real gdp equals potential gdp. Potential gdp is independent of the price level = gdp at full employment. Long-run aggregate supply curve (las) is vertical at potential gdp. P same % change in money wage rate quantity of real gdp supplied remains the same at potential gdp. Short-run aggregate supply = aggregate supply when the money wage, the prices of other resources, and. Sas slopes upward potential gdp p = 110 potential gdp remain constant. P with no change in money wage rate and other factor prices quantity of real gdp supplied (cid:4666) firms increase production(cid:4667) With a given money wage rate, the sas cuts the las at. A change in p = movement along the sas curve.