LGS 200 Lecture Notes - Lecture 20: Foreign Exchange Market, Classical Dichotomy, Aggregate Supply

71 views7 pages

yellowcattle867

9 May 2017

School

University of Alabama

Department

Legal Studies

Course

LGS 200

Professor

Tripp

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

In the short run, gdp fluctuates around its trend: over the long run, real gdp grows about 3% per year on average. Recessions: periods of falling real incomes and rising unemployment. In the short run, changes in nominal variables (like the money supply or p) can affect real variables (like y or the u-rate): to study the short run,, we use a new model. The model of aggregate demand and aggregate supply: the model determines the equilibrium price level and equilibrium output (real gdp) The aggregate-demand (ad) curve: the ad curve shows the quantity of all goods and services demanded in the economy at any given price level. Y: y = c + i + g + nx, assume g fixed by government policy, to understand the slope of ad, must determine how a change in p affects c, i, and nx. The wealthy effect (p and c: suppose p rises.

Related Questions

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. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

6. Shifts in the Aggregate Supply Curves

List and discuss the things that will make the Short Run Aggregate Supply curve shift to the left or to the right. Illustrate.

List and discuss the things that will make the Long Run Aggregate Supply curve shift to the left or to the right. Illustrate.

7. What is the natural level of output?

scarletraven382

1. Does the Aggregate Demand (AD) curve always slope downward? Discuss and use explanations (interest rate effect, wealth effects, open economy effect).

2. The Aggregate Supply (AS) curve slopes upward to reflect the profit motive of businesses. So, why there are two versions of the AS curve( i.e. short run and long- run). Discuss.

3. Does Aggregate Demand and Aggregate Supply always occur at full-employment level?

a) If yes, will there be some unemployment? Explain

b) If no, then the actual real GDP may be different from the potential real GDP. When the actual and potential GDP are not the same, then the economy is either in a recessionary gap or inflationary gap. Explain

LGS 200 Lecture Notes - Lecture 20: Foreign Exchange Market, Classical Dichotomy, Aggregate Supply

Document Summary

Get access

Related Documents

LGS 200 Lecture Notes - Lecture 17: Nominal Interest Rate, Classical Dichotomy, Real Interest Rate

LGS 200 Lecture Notes - Lecture 19: Loanable Funds, Real Interest Rate, Foreign Exchange Market

LGS 200 Lecture Notes - Lecture 18: Foreign Portfolio Investment, Capital Outflow, Loanable Funds

Related Questions