ECON 103 Lecture Notes - Lecture 5: Aggregate Demand, Aggregate Supply, Equilibrium Point
8 Sep 2016
School
Department
Course
Professor
Document Summary
Y = c + i + g + nx (open economy) Nx = net exports (exports - imports) Aggregate - whole by combining different elements. The country"s capacity to produce depends on Population of worker and their human capital. That allows capital and labor to produce output. Not affected by short run economic shocks. Long-run aggregate supply (lras) does not change in short run. Increased number of young people finishing school (baby boom) Negative net migration (people leaving for other countries) Brain drain from poor countries - have the. Permanent shift in weather pattern making farming more difficult. Change in availability of imported resources (good or bad) Main reason lras is vertical is that it is only affected by economic capacity and not prices. Firms, however, are affected by and respond to prices. Firms sell off inventory, hire more labor & overtime. Some firms slow to adjust price levels of goods. Costs associated with changing price of good sold.
