ECON100 Lecture Notes - Lecture 15: Gdp Deflator, Aggregate Supply, Potential Output

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peachhare525

21 Jun 2016

School

University of Waterloo

Department

Economics

Course

ECON100

Professor

Joseph Dejuan

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Document Summary

Demand and supply of all final goods and services in in the economy. Quantity of real gdp supplied is the total quantity firms plan to produce during a given period. Depends on quantity of labor, physical and human capital, and state of technology. Aggregate supply is the relationship between real gdp supplied and price level (gdp deflator, cpi, etc) Long run aggregate supply is the relationship between quantity of real gdp supplied and price level when the money wage changes in step with the price level to maintain full-employment. Potential gdp is independent of the price level. Short run aggregate supply is the relationship between the quantity of real. Gdp supplied and the price level when the money wage rate, the prices of other resources, and potential gdp stay constant. Rise in price level with no change in money wage rate and other factor prices increases the quantity of real gdp supplied.

Related Questions

The aggregate demand curve illustrates the relationship between

a. the price level and the potential demand for real GDP.

b. the price level and the potential quantity demanded of real GDP.

c. the price level and the number of goods supplied by firms.

d. the price level and the quantity of goods demanded by households, firms, government, and foreigners.

raspberrygoat38

Which of the following is correct?

a)the intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity of a single good.

b)The aggregate demand curve indicates a positive relationship between the price level and GDP.

c)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity.

d)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price level and the equilibrium level of real GDP.

e)Other things equal, a downward shift of the aggregate demand curve implies that the economy enters an expansionary phase.

erinhyena808

1. Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

2. What are the major factors that determine investment, and what impact does each have on aggregate demand?

3. Describe the difference between a microeconomic demand curve and an aggregate demand curve.

4. The aggregate demand curve portrays the relationship between the price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

5. Explain how changes in the stock of capital affect aggregate supply.

6. What is the natural level of output?

periwinklecrow416

ECON100 Lecture Notes - Lecture 15: Gdp Deflator, Aggregate Supply, Potential Output

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