Economics 1022A/B Chapter Notes - Chapter 26: Human Capital, Aggregate Supply, Keynesian Economics

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Jeannie Gillmore

Document Summary

Aggregate supply and demand explain how equilibrium real gdp and the price level are determined and uctuate aggregate supply. Quantity of real gdp supplied depends on labour, physical and human capital, and technology (this increases long and short run supply) Potential gdp is the quantity of real gdp at full employment. At any given time only quantity of labour can vary. Labour market can be above, below or at full employment long run supply curve (las) Relationship between quantity of real gdp supplied (total quantity of goods and services) and the price level when money wage rate changes in step with price level to achieve full employment. If potential gdp increases, the curve shifts right. Money wage rate doesn"t effect this curve short run supply curve (sas) A rise in money wage rate with no change in potential gdp shifts this curve left (no change in las) If potential gdp increase, the curve shifts right.