BBG 101 Lecture Notes - Lecture 8: Money Supply, Microeconomics, Aggregate Supply
2 Nov 2020
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Document Summary
The as curve shows the total quantity of goods and services firms produce and sell at any given price level. As is: upward sloping in short run, vertical in long run. The natural rate of output is the amount of output the economy produces when unemployment is at its natural rate. It is also called potential output or full employment output. Yn is determined by the economy"s stocks of labor, capital and natural resources, and on the level of technology. An increase in p does not affect any of these so it does not affect yn. Any event that changes any of the determinants of yn will shift lras. Example: immigration increases, causing yn to rise. Using ad and as to depict long run growth and inflation. Over the long run, technological progress shifts lras to the right and growth in the consumption shifts ad to the right. Result: ongoing inflation and growth in output.
