Textbook Notes (368,432)
Canada (161,877)
York University (12,845)
Economics (1,011)
ECON 1010 (256)
Chapter

Econ notes number 2.docx

3 Pages
114 Views
Unlock Document

Department
Economics
Course
ECON 1010
Professor
sadiamariamahmed
Semester
Summer

Description
Econ notes number 2 Chapter 26 Aggregate supply and aggregate demand. AS-AD model is a model of an imaginary market for the total of all the final goods and services that make up real GDP. Quantity supplied and supply: the total quantity of goods and services, valued in constant base year dollars, that firms plan to produce during given period.- depends on the quantity of labour employed, quantity of physical and human capital, and the state of technology. *the labour market can be in any one of three states: at full employment, above full employment or below full employment. Aggregated supply: the relationship between the quantity of real GDP supplied and the price level. It is different in the long run and short run Long run aggregated 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. Short run aggregated supply: the relationship between the quantity of real GDP supplied and the price level when money wage rate, the price of other resources, and potential GDP remain constant. Changes in Aggregated Supply Changes in potential GDP: when GDP changes, aggregated supply changes. Potential GDP increases because of three reasons: 1. An increase in the full employment quantity of labour 2. increase in the quantity of capital 3. advance in technology Changes in the money wage rate and other factor prices When the money price of something changes short run aggregated supply changes but not long run aggregated supply. Aggregated demand The quantity of real GDP demanded (y) is the sum of real consumption expenditure (c ), investment (i), goverments expenditures (G) and exports (X) minus imports (m) Y= C+I+G+X-M The aggregated demand curve: described by an aggregated demand schedual and aggregate demand curve. Why does it slop downward? For 2 reasons 1. Wealth effects: real wealth is t he amount of money in the banks, bonds, stocks, and other assets people own. People have to save for something wich decreases consumption is a decrease in aggregat
More Less

Related notes for ECON 1010

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