EC140 Chapter Notes - Chapter 26: Capital Accumulation, Macroeconomics, Output Gap

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plumbeaver231

17 Oct 2012

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The aggregates supply and demand curve explain how real gdp and price level are determined and how they interact. The quantity of real gdp supplied is the total quantity of goods and services, valued in constant base year dollars, that firms plan to produce during a given period. This quantity depends on the quantity of labour employed; the quantity or physical and human capital; and the state of technology. The quantity of capital and the state of technology are fixed; they depend on decisions that were made in the past. Aggregate supply is the relationship between the quantity of real gdp supplied and the price level. There is: long term aggregate supply, and short run aggregate supply. The relationship between the quantity of real gdp supplied and the price level when the money wage rate changes in step with the price level to achieve full employment.

Related Questions

Which of the following is correct?

a)the intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity of a single good.

b)The aggregate demand curve indicates a positive relationship between the price level and GDP.

c)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity.

d)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price level and the equilibrium level of real GDP.

e)Other things equal, a downward shift of the aggregate demand curve implies that the economy enters an expansionary phase.

erinhyena808

1. Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

2. What are the major factors that determine investment, and what impact does each have on aggregate demand?

3. Describe the difference between a microeconomic demand curve and an aggregate demand curve.

4. The aggregate demand curve portrays the relationship between the price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

5. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

6. Shifts in the Aggregate Supply Curves

List and discuss the things that will make the Short Run Aggregate Supply curve shift to the left or to the right. Illustrate.

List and discuss the things that will make the Long Run Aggregate Supply curve shift to the left or to the right. Illustrate.

7. What is the natural level of output?

scarletraven382

1. Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

2. What are the major factors that determine investment, and what impact does each have on aggregate demand?

3. Describe the difference between a microeconomic demand curve and an aggregate demand curve.

5. Explain how changes in the stock of capital affect aggregate supply.

6. What is the natural level of output?

periwinklecrow416

EC140 Chapter Notes - Chapter 26: Capital Accumulation, Macroeconomics, Output Gap

EC140 Full Course Notes

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