ECN 204 Midterm: ECN204 Notes AFTER Midterm

• School: Ryerson University
• Department: Economics
• Course: ECN 204
• Professor: Amy Peng

Document Summary

Aggregate expenditure model x-axis = ae (plant total spending) Ae = c + i + g + nx. Aggregate supply & demand model y-axis = y (gdp) 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: consumer price index, not inflation, general level of prices directly determines purchasing power of money, stagflation was difficult to explain with keynesian cross model; Stagflation = economy experience high inflation & high employment. Amounts of real output that buyers collectively desire to purchase at each possible price level. Downward slope to ad (aggregate demand) www. notesolution. com. Slopes downward because of following effects of change in price level: real-balances effect j directly related to price & how much money to hold price := purchasing power ;; demand ;