ECON 1BB3 Lecture Notes - Lecture 9: Human Capital, W. M. Keck Observatory, 1

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Econ 1bb3: macroeconomics lecture 9: aggregate demand and supply. Drawn holding all other variables constant i. e. ms and e. Recall basic equation of national income accounting. Factors that cause the aggregate demand curve to shift. Amount of capital and labour used in the production process. Application of classical dichotomy and monetary neutrality. Output (y) and price level (p) are positively related. Recall: profit per unit = price per unit - production cost per unit. So if price per unit increases and production cost per unit stays the same, then profit per unit will increase and aggregate supply will increase. Natural rate of unemployment can change because of changes in: Page 332 : omit reading on the price level and consumption: the wealth effect . Pages 343-344 : omit reading on the sticky-price theory. Page 344 : omit reading on the misperceptions theory. Economic activity fluctuates from year to year. Recession: a period of falling incomes and rising unemployment.