ECN 600 Lecture Notes - Lecture 2: Aggregate Supply, Aggregate Demand, Potential Output

176 views8 pages
29 Feb 2016
Department
Course
Professor

Document Summary

Hence, we say in these models output is demand determined . In fact, the equilibrium point in these models gives us the aggregate demand for goods and services. Further, allowing for price as well as output changes is essential for studying output changes is essential for studying the adjustment of the economy from the short run to the long run. In this chapter we first use the is-lm framework to derive for each price level framework to derive for each price level the amount of output demanded. This relationship is called the aggregate demand curve. We then study how firms respond to changes in the price level, by deriving the aggregate supply curve, which gives us for each price level the amount of output that will be supplied by the firms. Once the aggregate demand and aggregate supply curves are derived, we discuss the adjustment of the economy from the short run (sticky prices) to the long run (flexible prices)

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

Related Questions