ECO100Y5 Lecture Notes - Lecture 23: Aggregate Demand, Aggregate Supply

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17 Jan 2018
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ECO100Y5 Full Course Notes
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Chapter #23: output and prices in the short run. Exogenous changes in the price level: ae curve shifts when there is a change in the price level, shift occurs because a change in the price level affects desired consumption expenditures and desired net exports. Ae function shifts up: changes in the price level change the wealth of householders and bond issuers, but because the changes offset each other, there is no change in aggregate wealth. Changes in net exports: a rise in the domestic price level (constant exchange rate) makes the nx shift down and. Ae shift down: a fall in the domestic price level (constant exchange rate) makes the nx shift up and ae shift up. Changes in equilibrium gdp: ae shifts up, therefore equilibrium gdp rises, ae shifts down, therefore equilibrium gdp falls. The aggregate demand curve: curve that shows the relationship between the price level and the equilibrium level of real.

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