EC140- Final Exam Guide - Comprehensive Notes for the exam ( 26 pages long!)
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EC140 Full Course Notes
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If ae shifts up, ad increases, and the ad curve shifts right. Increase in government spending: any other shift of ae leads to a shift in ad curve, simple multiplier, the change in autonomous spending time the multiplier. Ec140 chapter 23 lecture 9 (output and prices: aggregate expenditure and prices. Increase in prices lead to reduction of the ad curve: multiple shifts. In canada its easy to have impact in exports: as input falls supply turns to the left, ontario bigger than canadian supply shock. It (cid:272)a(cid:374) shift (cid:271)ut the (cid:373)odel does(cid:374)"t (cid:272)ha(cid:374)ge: potential gdp, y*, is constant, everything comes back to the potential gdp, acts as income, real gdp shifts toward y* If real gdp < potential output: recessionary gap. Inflationary gaps bring quick wage responses: recessionary gaps bring very slow wage adjustment, extensive research into why, behavioural reponses by workers seem most likely.
