Study Guides (248,215)
Canada (121,406)
Economics (366)
ECN 204 (104)
Amy Peng (18)
Midterm

ECN204 Notes AFTER Midterm

14 Pages
895 Views
Unlock Document

Department
Economics
Course
ECN 204
Professor
Amy Peng
Semester
Winter

Description
Macroeconomics (AFTER MIDTERM) Aggregate Expenditure Model x-axis = AE (plant total spending) y-axis = Y (GDP) [o]LZ)z (short-term) ]L]o]]KZ[o]LK AE = C + I + G + NX Aggregate Supply & Demand Model - Shows how economic factors & policies can simultaneously affect overall price level along with real output; price does not chance - Deals with changes in overall price level of economy o Consumer Price Index, not inflation o General level of pricesirectly determines purchasing power of money o Stagflation was difficult to explain with Keynesian cross model; Stagflation = economy experience high inflation & high employment Aggregate Demand (AD) - Amounts of real output that buyers collectively desire to purchase at each possible price level - Planned AE & AD: - Price level falls 9-9[ - Output level increase z[-z - Downward slope to AD (Aggregate Demand) www.notesolution.comAggregate Demand (AD) - Slopes downward because of following effects of change in price level: 1. Real-balances effect J directly related to price & how much money to hold price := purchasing power ;; demand ; 2. Interest-rate effect J money demand, ability to hold cash in pockets; money supply normally fixed , but money demand not fixed money demand :7L} ZL2]LZo)high interest rate Change in investment 3. Foreign trade effect J export J imports = net exports exports falling, imports:; domestic products price :, demand ; - AD shifts = demand shock (negative leftright positive); due to other factors other than price changing our behavior Determinants of Aggregate Demand - Consumer spending N Consumer wealth, consumer expectations, taxes, household indebtedness - Investment Spending N Real interest rates N Expected returns Expectations about future business conditions Technology Degree of excess capacity Business taxes - Government Spending - Net Export Spending N National income abroad, exchange rates Aggregate Supply - Level of real domestic output that will be produced at each price level; input & output prices - Production responses to price level changes differ in long run & short run long run J economy can only produce up to potential GDP short run J produce more? - Input prices J contracts, prices cannot change for long period of change - Output prices J surplusshortage influence price Aggregate Supply Long Run - I] o }L}K[Zoo employment output (potential GDP) - Wages & other input prices risefall to match changes in price level - ZL2Z]L] oo}L[ ZL2o}]Z[ZL} ZL2]Looutput www.notesolution.com
More Less

Related notes for ECN 204

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit