ECON102 Lecture Notes - Lecture 13: Unemployment, Aggregate Supply, Potential Output
23 views2 pages
12 Nov 2018
School
Department
Course
Professor
CHAPTER 10- AGGREGATE DEMAND AND
AGGREGATE SUPPLY
• Aggregate means total.
• Pi(Q){profit}=price*quantity – cost*quantity
o =quantity(price-cost)
o Quantity= A(technology)*K^alpha(capital)*L^B(labor)
(don’t need to study, extra info)
• Total quantity of production firm plans to produce. Total
supply depends on capital (physical and human) & technology.
• In short run, only quantity of labor can be increased to
increase production.
• Full employment=natural unemployment which is 0 cyclical
unemployment.
• Potential GDP= real GDP at full employment.
• Aggregate supply is the quantity of real GDP supplied and the
price level.
o In long run, we can change all factors. In econ, we
believe that in long run, real GDP= potential GDP
o Price level increases from 10 to 20, and wages remain
constant, but we would expect to earn higher wages. So,
in the LR, the difference between prices and wages is
constant
o In the LR, wage rates increase in the same proportion as
price level, then aggregate supply won’t change
Unlock document
This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.
Already have an account? Log in
apricotcaribou323 and 20 others unlocked
19
ECON102 Full Course Notes
Verified Note
19 documents
Get access
Grade+
$40 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers